Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 01, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Houston Wire & Cable CO | ||
Entity Central Index Key | 0001356949 | ||
Document Type | 10-K | ||
Trading Symbol | HWCC | ||
Document Period End Date | Dec. 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 Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 136,842,163 | ||
Entity Common Stock, Shares Outstanding | 16,613,012 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | |
Current assets: | |||
Cash | $ 1,393 | ||
Accounts receivable, net | |||
Trade | 52,946 | 51,031 | |
Other | 6,847 | 6,365 | |
Inventories, net | 94,325 | 88,115 | |
Income tax receivable | 435 | 449 | |
Prepaids | 737 | 1,938 | |
Total current assets | 156,683 | 147,898 | |
Property and equipment, net | 11,456 | 11,355 | |
Intangible assets, net | 11,179 | 12,015 | |
Goodwill | [1] | 22,353 | 22,353 |
Deferred income taxes | 930 | ||
Other assets | 456 | 418 | |
Total assets | 203,057 | 194,039 | |
Current liabilities: | |||
Book overdraft | 3,028 | ||
Trade accounts payable | 11,253 | 8,449 | |
Accrued and other current liabilities | 19,232 | 16,823 | |
Total current liabilities | 30,485 | 28,300 | |
Debt | 71,316 | 73,555 | |
Deferred income taxes | 414 | ||
Other long-term obligations | 578 | 1,026 | |
Total liabilities | 102,379 | 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: 16,611,651 and 16,491,181 shares outstanding at December 31, 2018 and 2017, respectively | 21 | 21 | |
Additional paid-in capital | 53,514 | 54,006 | |
Retained earnings | 105,975 | 97,336 | |
Treasury stock | (58,832) | (60,619) | |
Total stockholders' equity | 100,678 | 90,744 | |
Total liabilities and stockholders' equity | $ 203,057 | $ 194,039 | |
[1] | The balance is net of $12.6 million of accumulated impairment losses. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 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 | 16,611,651 | 16,491,181 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | |||
Sales | $ 356,858 | $ 317,697 | $ 261,644 |
Cost of sales | 271,650 | 245,035 | 208,694 |
Gross profit | 85,208 | 72,662 | 52,950 |
Operating expenses: | |||
Salaries and commissions | 38,110 | 36,570 | 29,369 |
Other operating expenses | 30,962 | 28,716 | 24,714 |
Depreciation and amortization | 2,178 | 2,772 | 3,018 |
Impairment charge | 60 | 2,384 | |
Total operating expenses | 71,310 | 68,058 | 59,485 |
Operating income (loss) | 13,898 | 4,604 | (6,535) |
Interest expense | 2,907 | 2,073 | 845 |
Income (loss) before income taxes | 10,991 | 2,531 | (7,380) |
Income tax expense (benefit) | 2,355 | 2,753 | (1,374) |
Net income (loss) | $ 8,636 | $ (222) | $ (6,006) |
Earnings (loss) per share: | |||
Basic (in dollars per share) | $ 0.53 | $ (0.01) | $ (0.37) |
Diluted (in dollars per share) | $ 0.52 | $ (0.01) | $ (0.37) |
Weighted average common shares outstanding: | |||
Basic (in shares) | 16,389,876 | 16,269,611 | 16,345,679 |
Diluted (in shares) | 16,523,599 | 16,269,611 | 16,345,679 |
Dividends declared per share (in dollars per share) | $ 0.15 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Balance at beginning at Dec. 31, 2015 | $ 21 | $ 54,621 | $ 106,048 | $ (60,689) | $ 100,001 |
Balance at beginning (in shares) at Dec. 31, 2015 | 20,988,952 | (4,276,326) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss/ income | (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 awards | 387 | $ (387) | |||
Impact of forfeited 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) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss/ income | (222) | (222) | |||
Repurchase of treasury shares | $ (177) | (177) | |||
Repurchase of treasury shares (in shares) | (27,156) | ||||
Amortization of unearned stock compensation | 1,004 | 1,004 | |||
Impact of forfeited awards | 361 | $ (361) | |||
Impact of forfeited awards (in shares) | (26,707) | ||||
Impact of released vested restricted stock units | (372) | $ 372 | |||
Impact of released vested restricted stock units (in shares) | 27,519 | ||||
Issuance of restricted stock awards | (811) | $ 811 | |||
Issuance of restricted stock awards (in shares) | 60,000 | ||||
Dividends accrual reversal | 8 | 8 | |||
Balance at end at Dec. 31, 2017 | $ 21 | 54,006 | 97,336 | $ (60,619) | 90,744 |
Balance at end (in shares) at Dec. 31, 2017 | 20,988,952 | (4,497,771) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss/ income | 8,636 | 8,636 | |||
Repurchase of treasury shares | $ (175) | (175) | |||
Repurchase of treasury shares (in shares) | (25,368) | ||||
Amortization of unearned stock compensation | 1,059 | 1,059 | |||
Amortization of reclassed liability awards | 411 | 411 | |||
Impact of forfeited awards | 179 | $ (179) | |||
Impact of forfeited awards (in shares) | (13,332) | ||||
Impact of released vested restricted stock units | (353) | $ 353 | |||
Impact of released vested restricted stock units (in shares) | 26,185 | ||||
Issuance of restricted stock awards | (1,788) | $ 1,788 | |||
Issuance of restricted stock awards (in shares) | 132,985 | ||||
Dividends accrual reversal | 3 | 3 | |||
Balance at end at Dec. 31, 2018 | $ 21 | $ 53,514 | $ 105,975 | $ (58,832) | $ 100,678 |
Balance at end (in shares) at Dec. 31, 2018 | 20,988,952 | (4,377,301) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating activities | |||
Net income (loss) | $ 8,636 | $ (222) | $ (6,006) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Impairment charge | 60 | 2,384 | |
Depreciation and amortization | 2,178 | 2,772 | 3,018 |
Amortization of unearned stock compensation | 1,298 | 1,176 | 856 |
Provision for doubtful accounts | 73 | 68 | 285 |
Provision for inventory obsolescence | 615 | 34 | 93 |
Deferred income taxes | (1,344) | 1,314 | 6 |
Other non-cash items | 62 | 222 | (116) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (2,507) | (12,719) | 4,019 |
Inventories | (6,825) | (7,942) | 10,483 |
Income taxes | 14 | 1,499 | (1,016) |
Prepaid expenses | 1,201 | (1,368) | 124 |
Book overdraft | (3,028) | (153) | (517) |
Trade accounts payable | 2,804 | 38 | 896 |
Accrued and other current liabilities | 2,460 | 3,571 | 2,587 |
Other operating activities | (359) | 368 | 147 |
Net cash provided by (used in) operating activities | 5,338 | (11,342) | 17,243 |
Investing activities | |||
Expenditures for property and equipment | (1,503) | (1,769) | (1,319) |
Proceeds from disposals of property and equipment | 20 | 8 | 5 |
Cash refunded (paid) for acquisition | 193 | (32,370) | |
Net cash used in investing activities | (1,483) | (1,568) | (33,684) |
Financing activities | |||
Borrowings on revolver | 367,513 | 333,301 | 302,898 |
Payments on revolver | (369,752) | (320,133) | (281,698) |
Proceeds from exercise of stock options | |||
Payment of dividends | (48) | (81) | (2,495) |
Purchase of treasury stock | (175) | (177) | (2,264) |
Net cash (used in) provided by financing activities | (2,462) | 12,910 | 16,441 |
Net change in cash | 1,393 | ||
Cash at beginning of year | |||
Cash at end of year | 1,393 | ||
Supplemental disclosures | |||
Cash paid during the year for interest | 2,811 | 1,961 | 728 |
Cash paid during the year for income taxes | $ 3,696 | $ 64 | $ 233 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
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, 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. 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 refund liability, the inventory obsolescence reserve, 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. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. 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, 2018 2017 2016 Denominator: Weighted average common shares for basic earnings per share 16,389,876 16,269,611 16,345,679 Effect of dilutive securities 133,723 — — Denominator for diluted earnings per share 16,523,599 16,269,611 16,345,679 Stock awards to purchase 298,406, 808,391 and 685,054 shares of common stock were not included in the diluted net income (loss) per share calculation for 2018, 2017 and 2016, respectively, as their inclusion would have been anti-dilutive. In 2017 and for the first quarter of 2018, the Company calculated earnings per share using the “two-class” method, whereby unvested share-based payment awards that contained non-forfeitable rights to dividends or dividend equivalents were considered “participating securities”, as discussed in Note 8, and therefore, these participating securities were treated as a separate class in computing earnings per share. Accounts Receivable Accounts receivable consists primarily of receivables from customers, less an allowance for doubtful accounts of $0.2 million at December 31, 2018 and 2017, and a reserve for returns and allowances of $0.4 million at December 31, 2017. In 2018, the reserve for returns and allowances has been reclassified to accrued liabilities as a refund liability as a result of the adoption of the new revenue recognition standard. 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: 2018 2017 2016 (In thousands) Balance at beginning of year $ 172 $ 151 $ 132 Bad debt expense 73 68 285 Write-offs, net of recoveries (63 ) (47 ) (266 ) Balance at end of year $ 182 $ 172 $ 151 Inventories Inventories are carried at the lower of cost, using the average cost method, and net realizable value 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 following table summarizes the changes in the inventory reserves for the past three years: 2018 2017 2016 (In thousands) Balance at beginning of year $ 3,925 $ 4,366 $ 4,829 Provision for inventory write-downs 615 34 93 Deduction for inventory write-offs (831 ) (475 ) (556 ) Balance at end of year $ 3,709 $ 3,925 $ 4,366 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 $1.4 million for the each of the years ended December 31, 2018 and 2017, and $1.3 million for the year ended December 31, 2016. 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, 2018, the goodwill balance was $22.4 million, representing 11.0% of the Company’s total assets. The Company conducts impairment testing for goodwill annually in the fourth quarter of its fiscal year and more frequently, on an interim basis, when an event occurs or circumstances change that indicate that the fair value of a reporting unit may have declined below its carrying value. Events or circumstances which could indicate a probable impairment include, but are not limited to, 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. The Company tests goodwill at the reporting unit level, which is defined as an operating segment or one level below an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. The Company determined that it has four reporting units for this purpose. Before testing goodwill, the Company considers whether or not to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount and whether an impairment test is required. If as a result of the qualitative assessment, the Company determines that an impairment test is required, or alternatively, if the Company elects to forego the qualitative assessment, the Company records an impairment to goodwill to the extent the carrying amount of the reporting unit, including goodwill, exceeds the fair value of the reporting unit. Intangibles Intangible assets, from the acquisition of Southwest and Southern in 2010 and the 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 reportable segment, sales of industrial products, including electrical and mechanical wire and cable, industrial fasteners, hardware and related services to the U.S. market. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM makes operational and resource decisions based on company-wide sales and margin performance compared to the established strategic goals of the Company. Revenue Recognition, Returns & Allowances 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). It is not normal Company practice to grant extended payment terms. Revenue is recognized net of any sales 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 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. 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. As a result of the adoption of the new revenue recognition standard, the reserve for returns and allowances has been reclassified from a contra-accounts receivable account to a liability account. 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 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 2018, 2017 or 2016. 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 $0.5 million for each of the years ended December 31, 2018 and 2017 and $0.4 million for the year ended December 31, 2016. 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. Stock-Based Compensation Restricted stock awards, units and cash awards are valued at the closing price of the Company’s stock on the grant date and are granted under the Company’s 2017 Stock Plan. Stock options issued under the Company’s now-expired 2006 Stock Plan had an exercise price equal to the fair value of the Company’s stock on the grant date. The Company recognizes compensation expense ratably over the vesting period. The Company’s stock-based compensation expense is included in salaries and commissions expense for employees and in other operating expenses for non-employee directors 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. 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 to determine whether a valuation allowance is required. 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 were recently adopted by 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 were 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 adoption did not have a material impact on the Company’s consolidated financial statements. See above for the Company’s updated revenue recognition policy. 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 was 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 was 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 amends prior guidance and 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 Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update).” This ASU added the SEC guidance released on December 22, 2017 regarding the income tax accounting implication of the Tax Cuts and Jobs Act to ASC Topic 740. At December 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 completed its accounting for all of the tax effects of the Tax Cuts and Jobs Act. Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in this update eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” The amendments in this update eliminate, add and modify certain disclosure requirements for defined benefit pension plans. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” that simplifies the accounting for share-based payment arrangements with nonemployees for goods and services. Under the ASU, the guidance on such payments to nonemployees is aligned with the accounting for share-based payments granted to employees, including the measurement of equity-classified awards, which is fixed at the grant date under the new guidance. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees and is effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company is assessing ASU 2018-07 and does not expect it to have a material impact on its accounting and disclosures. 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. In August 2018, the FASB amended the ASU with an additional (and optional) transition method to adopt the new leases standard. Under the new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption and the comparative periods presented in the financial statements continue to be in accordance with current GAAP. The Company will elect to use the package of practical expedients available under this amendment and will not elect the use of hindsight during transition. The Company has identified its leases or other contracts impacted by the new standard and is currently in the process of (i) finalizing the implementation of a software solution to account for leases under the new standard and (ii) updating its business processes and related policies, systems and controls to support recognition and disclosure under the new standard. The Company is still evaluating the impact that adopting this guidance will have on its consolidated financial statements. |
Detail of Selected Balance Shee
Detail of Selected Balance Sheet Accounts | 12 Months Ended |
Dec. 31, 2018 | |
Detail Of Selected Balance Sheet Accounts | |
Detail of Selected Balance Sheet Accounts | 2. Detail of Selected Balance Sheet Accounts Property and Equipment Property and equipment are stated at cost and consist of: At December 31, 2018 2017 (In thousands) Land $ 2,476 $ 2,476 Buildings 8,501 8,207 Machinery and equipment 14,867 14,165 25,844 24,848 Less accumulated depreciation 14,388 13,493 Total $ 11,456 $ 11,355 Intangible assets Intangible assets consist of: At December 31, 2018 2017 (In thousands) Tradenames $ 5,936 $ 5,996 Customer relationships 18,620 18,620 24,556 24,616 Less accumulated amortization: Tradenames — — Customer relationships 13,377 12,601 13,377 12,601 Total $ 11,179 $ 12,015 Intangible assets include customer relationships which are being amortized over 6 to 9 year useful lives. Tradenames have an indefinite life and are not amortized; however, they are tested annually for impairment. As of December 31, 2018, accumulated amortization on the acquired intangible assets was $13.4 million, and amortization expense was $0.8 million in the year ended December 31, 2018, $1.4 million in the year ended December 31, 2017 and $1.7 million in the year ended December 31, 2016. Future amortization expense to be recognized on the acquired intangible assets is expected to be as follows: Annual Amortization Expense (In thousands) 2019 $ 777 2020 777 2021 777 2022 777 2023 777 2024 777 2025 583 Goodwill At December 31, 2018 2017 (In thousands) Balance at beginning of year $ 22,353 $ 22,770 Less purchase price adjustment — 417 Balance at end of year (1) $ 22,353 $ 22,353 (1) The balance is net of $12.6 million of accumulated impairment losses. Accrued and Other Current Liabilities Accrued and other current liabilities consist of: At December 31, 2018 2017 (In thousands) Customer rebates $ 6,163 $ 5,648 Payroll, commissions, and bonuses 3,047 3,056 Accrued inventory purchases 5,140 4,796 Property taxes 1,041 943 Freight 689 318 Refund liability 435 — Professional fees 415 448 Accrued interest 259 206 Other 2,043 1,408 Total $ 19,232 $ 16,823 |
Impairment of Goodwill and Inta
Impairment of Goodwill and Intangibles | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairment of Goodwill and Intangibles | 3. Impairment of Goodwill and Intangible Assets The annual goodwill and indefinite-lived intangibles impairment test was performed as of October 1, 2018 for the Southern, Southwest and Vertex reporting units. This quantitative test indicated that goodwill was not impaired. The fair values of the reporting units were estimated using a discounted cash flow model (income approach) and a guideline public company method (market approach), giving 50% weight to each. The material assumptions used included cash flows based on future expected performance for the reporting units, weighted average costs of capital ranging from 11.5% to 15%, a long-term growth rate of 3% for the income approach and a control premium of 25.0% for the guideline public company method. The results of the test indicated that certain of the tradenames at Southwest were impaired. Accordingly, a charge of less than $0.1 million was recorded for 2018. During the second quarter of 2016 and prior to the annual impairment test of goodwill in October 2016, 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. There were no such impairment indicators for the Southern Wire 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 measured the goodwill 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 calculated 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 was 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. The Company is still anticipating significant growth in the businesses acquired in 2010 and in 2016. If this projected growth is not achieved and or there are future reductions in our market capitalization or market multiples, further goodwill and intangible assets impairments may result. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 4. Debt HWC Wire & Cable Company, the Company, Vertex, and Bank of America, N.A., as agent and lender, are parties to the Fourth Amended and Restated Loan and Security Agreement dated as of October 3, 2016 (the “Loan Agreement”). The 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 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 Loan Agreement is secured by substantially all of the property of the Company, other than real estate. The 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 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 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, 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.” The Company’s borrowings at December 31, 2018 and 2017 were $71.3 million and $73.6 million, respectively. The weighted average interest rates on outstanding borrowings were 4.1% and 3.2% at December 31, 2018 and 2017, respectively. During 2018, the Company had an average available borrowing capacity of approximately $24.0 million. This average was computed from the monthly borrowing base certificates prepared for the lender. At December 31, 2018, the Company had available borrowing capacity of $28.7 million under the terms of the Loan Agreement. The Company paid $0.1 million for each of the years ended December 31, 2018 and 2017 and $0.2 million for the year ended December 31, 2016, for the unused facility. Principal repayment obligations for succeeding fiscal years are as follows: (In thousands) 2019 $ — 2020 71,316 Total $ 71,316 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. Income Taxes On December 22, 2017, the United States enacted significant changes to the U.S. tax law following the passage and signing of H.R.1, “An Act to Provide the Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (previously known as “The Tax Cuts and Jobs Act”). In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update).” This ASU added the SEC guidance released on December 22, 2017 regarding the income tax accounting implication of the Tax Cuts and Jobs Act to ASC Topic 740. During 2017, the Company recorded income tax expense of $0.3 million to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%. As of December 31, 2018, the Company completed its analysis of its accounting for the income tax effects of tax reform and as a result no additional adjustments were recorded. The provision (benefit) for income taxes consists of: Year Ended December 31, 2018 2017 2016 (In thousands) Current: Federal $ 3,041 $ 1,280 $ (1,285 ) State 658 159 (95 ) Total current 3,699 1,439 (1,380 ) Deferred: Federal (1,246 ) 1,259 13 State (98 ) 55 (7 ) Total deferred (1,344 ) 1,314 6 Total $ 2,355 $ 2,753 $ (1,374 ) 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, 2018 2017 2016 Federal statutory rate 21.0 % 35.0 % 35.0 % State taxes, net of federal benefit 4.3 4.2 1.7 Impairment, non-deductible portion 0.1 — (6.6 ) Share-based compensation 1.2 15.2 (9.0 ) Non-deductible items 2.1 4.6 (3.9 ) Valuation allowance (9.5 ) 41.0 — Tax reform rate change — 12.9 — Other 2.2 (4.1 ) 1.4 Total effective tax rate 21.4 % 108.8 % 18.6 % The share-based compensation 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. Significant components of the Company’s deferred taxes were as follows: Year Ended December 31, 2018 2017 (In thousands) Deferred tax assets: Uniform capitalization adjustment $ 1,469 $ 1,272 Inventory valuation 1,179 1,334 Accounts receivable allowance 45 51 Stock compensation expense 681 725 Property and equipment 31 62 Other 548 134 Total deferred tax assets 3,953 3,578 Deferred tax liabilities Goodwill 649 460 Intangibles 2,315 2,385 Other 59 109 Total deferred tax liabilities 3,023 2,954 Less: Valuation allowance — 1,038 Net deferred tax assets/(liabilities) $ 930 $ (414 ) 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, to determine whether a valuation allowance is required. The result of the Company’s assessment is that it is more likely than not that the Company will generate sufficient taxable income to utilize the deferred tax assets. Therefore, the Company no longer requires a valuation allowance. The Company does not have any unrecognized tax benefits recorded at December 2018, 2017 and 2016. 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, 2018, 2017 and 2016, the Company recorded no provision for interest or penalties related to uncertain tax positions. The tax years 2014 through 2018 remain open to examination by the major taxing jurisdictions to which the Company is subject. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | 6. 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. Under the terms of the 2017 Stock Plan, the Company acquired 25,368 shares that were surrendered by the holders to pay withholding taxes in 2018. Under the terms of the 2006 Stock Plan, the Company acquired 27,156 shares that were surrendered by the holders to pay withholding taxes in 2017. The Company paid a quarterly cash dividend from August 2007 until August 2016, resulting in aggregate dividends in 2016 of $2.5 million. 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, 2018 | |
Retirement Benefits [Abstract] | |
Retirement-related Benefits | 7. Retirement-related Benefits Defined Contribution Plan The Company maintains a combination profit-sharing plan and salary deferral plan for the benefit of its employees who are 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 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, 2018, 2017 and 2016 was $0.2 million for each year. Defined Benefit Plan The Company has a non-contributory defined benefit pension plan for those current and former employees of Vertex who are subject to a collective bargaining agreement. Currently, there are fifteen active employees, sixteen retired and six 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 approximate the benefit payments made each year. A total contribution of less than $0.1 million was made during each of the years ended December 31, 2018, 2017 and 2016. The current projected benefit obligation was $1.1 million and $1.0 million as of December 31, 2018 and 2017, respectively. The discount rate used to determine the projected benefit obligation was 4.18% and 3.77% in 2018 and 2017, respectively. The Company’s investment policy is to maximize the expected return for an acceptable level of risk. The expected long-term rate of return on plan assets, which was 5%, is based on a target allocation of assets with the goal of earning the highest rate of return while maintaining risk at acceptable levels. The target asset allocations for the defined benefit plan were 68% and 69% equity securities and 32% and 31% debt securities as of December 31, 2018 and 2017, respectively. The fair value of the assets of the defined benefit plan were as follows: At December 31, 2018 2017 (In thousands) Equity mutual funds $ 701 $ 740 Fixed income – corporate bonds 326 326 Total fair value of assets $ 1,027 $ 1,066 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 2019 and expects the annual benefit payments to be approximately $0.1 million per year. |
Incentive Plans
Incentive Plans | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Incentive Plans | 8. Incentive Plans On August 4, 2017, the Board of Directors approved the Houston Wire & Cable Company 2017 Stock Plan (the “2017 Plan”). The 2017 Plan was approved by the stockholders at the 2018 Annual Meeting on May 8, 2018. The 2017 Plan provides for discretionary grants of stock options, stock awards, stock units and stock appreciation rights (SARs) to employees and directors up to a total of 1,000,000 shares. Shares issuable under the 2017 Plan may be authorized but unissued shares or treasury shares. If any award granted under the 2017 Plan expires, terminates or is forfeited or cancelled for any reason, the shares subject to the award will again be available for issuance. Any shares subject to an award that are delivered to the Company or withheld by the Company on behalf of a participant as payment for the award (including the exercise price of a stock option or SAR) or as payment for any withholding taxes due in connection with the award, or that are purchased by the Company with proceeds received from a stock option exercise, will not again be available for issuance. The 2017 Plan’s purpose is to attract and retain outstanding individuals as employees and directors of the Company and its subsidiaries and to provide them with additional incentive to expand and improve the Company’s profits by giving them the opportunity to acquire or increase their proprietary interest in the Company. The 2017 Plan succeeded the Company’s 2006 Stock Plan (the “2006 Plan”), which expired on May 1, 2017. The types of equity awards previously authorized under the 2006 Plan did not significantly differ from those permitted under the 2017 Plan. 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 2018, 2017 or 2016. All granted stock options have vested, with the last grant having an expiration date of December 20, 2021. The following summarizes stock option activity and related information: 2018 Options (in 000’s) Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding-Beginning of year 223 $ 13.10 $ — 2.84 Granted — — Exercised — — Forfeited (30 ) 11.17 Expired (39 ) 13.42 Outstanding-End of year 154 13.40 $ — 2.52 Exercisable-End of year 154 13.40 $ — 2.52 There was no excess tax benefit for the years ended December 31, 2018, 2017 and 2016. There were no options exercised in the years ended December 31, 2018, 2017 and 2016. There is no intrinsic value of options outstanding and exercisable as of December 31, 2018 as the closing stock price at the end of 2018 creates a negative intrinsic value. The total grant-date fair value of options vested during 2018 was $0, as all the options vested as of December 31, 2017. The total grant-date fair value of options vested during the years ended December 31, 2017 and 2016 was $0.2 million and $0.3 million, respectively. Restricted Stock Awards, Restricted Stock Units and Cash Awards As a result of the approval of the 2017 Plan by the stockholders at the 2018 Annual Meeting, all cash/liability awards granted prior to stockholder approval of the 2017 Plan were reclassified to restricted stock units (equity) effective May 8, 2018. The total liability reclassified to additional paid-in-capital was $0.4 million. This modification resulted in an increase in total fair value of $0.1 million, recognized over the terms of the grants, which range from 1 to 5 years. On December 4, 2018, the Board of Directors granted to the Company’s President and CEO 48,387 voting shares of restricted stock and to the CFO, 12,097 voting shares of restricted stock under the 2017 Plan. The shares vest in one-third increments on the first, second and third 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 if and when the related shares or units vest. The Board of Directors also granted 44,357 voting shares of restricted stock under the 2017 Plan to members of management on December 4, 2018. The 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 if and when the related shares or units vest. On November 6, 2018 and June 1, 2018, the Company awarded restricted stock units with a grant date value of $30,000 and $55,000 for a total of 4,950 and 6,667 restricted stock units, respectively, to its newly appointed non-employee directors. These awards of restricted stock units vest at the date of the 2019 Annual Meeting of Stockholders. Each grant entitles the non-employee director 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. Following the Annual Meeting of Stockholders on May 8, 2018, the Company approved the award of restricted stock units with a grant date value of $60,000 to each non-employee director who was re-elected, for an aggregate of 31,372 restricted stock units. Each award of restricted stock units vests at the date of the 2019 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. Also on May 8, 2018, the Company granted 28,144 voting shares of restricted stock to new members of the management team. Of the 28,144 shares granted, 26,144 shares vest in one third increments on the first, second and third anniversaries of the date of grant and the remaining 2,000 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 if and when the related shares vest. Restricted common shares and restricted stock units 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, 2018: 2018 Shares Units Shares (in 000’s) Weighted Average Market Value at Grant Date Shares (in 000’s) Weighted Average Market Value at Grant Date Non-vested -Beginning of year 238 $ 7.33 40 $ 7.50 Granted 133 6.51 43 7.47 Vested (99 ) 7.61 (60 ) 7.65 Cancelled/Forfeited (13 ) 7.63 (5 ) 7.65 Expired — — — — Cash awards converted to equity — — 197 7.65 Non-vested -End of year 259 $ 6.78 215 $ 7.59 Total stock-based compensation cost was $1.3 million for the year ended December 31, 2018, $1.2 million for the year ended December 31, 2017, of which $1.0 million was for equity awards and $0.2 million was for liability awards, and $0.9 million for the year ended December 31, 2016. Total income tax benefit recognized for equity awards stock-based compensation arrangements was $0.2 million for each of the years ended December 31, 2018 and 2017 and $0.3 million for the year ended December 31, 2016. As of December 31, 2018, there was $2.0 million of total unrecognized compensation cost related to non-vested, stock-based compensation arrangements. The cost is expected to be recognized over a weighted average period of approximately 29 months. There are 627,283 shares available for future grants under the 2017 Plan at December 31, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. 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 $3.7 million in 2018, $3.5 million in 2017 and $2.6 million in 2016. Future minimum lease payments under non-cancelable operating leases with initial terms of one year or more consisted of the following at December 31, 2018: (In thousands) 2019 $ 3,868 2020 3,026 2021 2,698 2022 2,550 2023 1,410 Thereafter 1,575 Total minimum lease payments $ 15,127 The Company had aggregate purchase commitments for fixed inventory quantities of approximately $54.5 million at December 31, 2018. 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 term of the lease, which was 54 months at December 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 from operations. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events On March 12, 2019, the Company, as guarantor, HWC Wire & Cable Company and Vertex, as borrowers, and Bank of America, N.A., as lender and agent entered into a Second Amendment to Fourth Amended and Restated Loan and Security Agreement, extending the expiration date of the Company’s $100 million revolving credit facility until March 12, 2024, substantially, on the same terms as currently in effect. |
Select Quarterly Financial Data
Select Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Select Quarterly Financial Data (unaudited) | 11. 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, 2018. The unaudited information has been prepared on the same basis as the audited consolidated financial statements. Year Ended December 31, 2018 Fourth Quarter Third Quarter Second Quarter First Quarter (in thousands, except per share data) Sales $ 87,906 $ 90,074 $ 93,852 $ 85,026 Gross profit $ 20,979 $ 21,393 $ 22,347 $ 20,489 Operating income $ 3,190 $ 3,046 $ 4,392 $ 3,270 Net income $ 1,628 $ 2,455 $ 2,606 $ 1,947 Earnings per share: Basic $ 0.10 $ 0.15 $ 0.16 $ 0.12 (1) Diluted $ 0.10 $ 0.15 $ 0.16 $ 0.12 (1) Year Ended December 31, 2017 Fourth Quarter Third Quarter Second Quarter First Quarter (in thousands, except per share data) Sales $ 82,146 $ 81,196 $ 75,646 $ 78,709 Gross profit $ 20,843 $ 18,570 $ 16,318 $ 16,931 Operating income (loss) $ 2,969 $ 2,047 $ (162 ) $ (250 ) Net income (loss) $ 1,996 $ (1,711 ) $ (54 ) $ (453 ) Earnings (loss) per share: Basic $ 0.12 (1) $ (0.11 ) $ (0.00 ) $ (0.03 ) Diluted $ 0.12 (1) $ (0.11 ) $ (0.00 ) $ (0.03 ) (1) The “two-class” method was used to calculate earnings per share which resulted in the same value. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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, 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. |
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 refund liability, the inventory obsolescence reserve, 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. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. |
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, 2018 2017 2016 Denominator: Weighted average common shares for basic earnings per share 16,389,876 16,269,611 16,345,679 Effect of dilutive securities 133,723 — — Denominator for diluted earnings per share 16,523,599 16,269,611 16,345,679 Stock awards to purchase 298,406, 808,391 and 685,054 shares of common stock were not included in the diluted net income (loss) per share calculation for 2018, 2017 and 2016, respectively, as their inclusion would have been anti-dilutive. In 2017 and for the first quarter of 2018, the Company calculated earnings per share using the “two-class” method, whereby unvested share-based payment awards that contained non-forfeitable rights to dividends or dividend equivalents were considered “participating securities”, as discussed in Note 8, and therefore, these participating securities were treated as a separate class in computing earnings per share. |
Accounts Receivable | Accounts Receivable Accounts receivable consists primarily of receivables from customers, less an allowance for doubtful accounts of $0.2 million at December 31, 2018 and 2017, and a reserve for returns and allowances of $0.4 million at December 31, 2017. In 2018, the reserve for returns and allowances has been reclassified to accrued liabilities as a refund liability as a result of the adoption of the new revenue recognition standard. 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: 2018 2017 2016 (In thousands) Balance at beginning of year $ 172 $ 151 $ 132 Bad debt expense 73 68 285 Write-offs, net of recoveries (63 ) (47 ) (266 ) Balance at end of year $ 182 $ 172 $ 151 |
Inventories | Inventories Inventories are carried at the lower of cost, using the average cost method, and net realizable value 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 following table summarizes the changes in the inventory reserves for the past three years: 2018 2017 2016 (In thousands) Balance at beginning of year $ 3,925 $ 4,366 $ 4,829 Provision for inventory write-downs 615 34 93 Deduction for inventory write-offs (831 ) (475 ) (556 ) Balance at end of year $ 3,709 $ 3,925 $ 4,366 |
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 $1.4 million for the each of the years ended December 31, 2018 and 2017, and $1.3 million for the year ended December 31, 2016. |
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, 2018, the goodwill balance was $22.4 million, representing 11.0% of the Company’s total assets. The Company conducts impairment testing for goodwill annually in the fourth quarter of its fiscal year and more frequently, on an interim basis, when an event occurs or circumstances change that indicate that the fair value of a reporting unit may have declined below its carrying value. Events or circumstances which could indicate a probable impairment include, but are not limited to, 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. The Company tests goodwill at the reporting unit level, which is defined as an operating segment or one level below an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. The Company determined that it has four reporting units for this purpose. Before testing goodwill, the Company considers whether or not to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount and whether an impairment test is required. If as a result of the qualitative assessment, the Company determines that an impairment test is required, or alternatively, if the Company elects to forego the qualitative assessment, the Company records an impairment to goodwill to the extent the carrying amount of the reporting unit, including goodwill, exceeds the fair value of the reporting unit. |
Intangibles | Intangibles Intangible assets, from the acquisition of Southwest and Southern in 2010 and the 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 reportable segment, sales of industrial products, including electrical and mechanical wire and cable, industrial fasteners, hardware and related services to the U.S. market. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM makes operational and resource decisions based on company-wide sales and margin performance compared to the established strategic goals of the Company. |
Revenue Recognition, Returns & Allowances | Revenue Recognition, Returns & Allowances 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). It is not normal Company practice to grant extended payment terms. Revenue is recognized net of any sales 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 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. 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. As a result of the adoption of the new revenue recognition standard, the reserve for returns and allowances has been reclassified from a contra-accounts receivable account to a liability account. 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 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 2018, 2017 or 2016. 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 $0.5 million for each of the years ended December 31, 2018 and 2017 and $0.4 million for the year ended December 31, 2016. |
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. |
Stock-Based Compensation | Stock-Based Compensation Restricted stock awards, units and cash awards are valued at the closing price of the Company’s stock on the grant date and are granted under the Company’s 2017 Stock Plan. Stock options issued under the Company’s now-expired 2006 Stock Plan had an exercise price equal to the fair value of the Company’s stock on the grant date. The Company recognizes compensation expense ratably over the vesting period. The Company’s stock-based compensation expense is included in salaries and commissions expense for employees and in other operating expenses for non-employee directors 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. 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 to determine whether a valuation allowance is required. |
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 were recently adopted by 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 were 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 adoption did not have a material impact on the Company’s consolidated financial statements. See above for the Company’s updated revenue recognition policy. 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 was 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 was 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 amends prior guidance and 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 Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update).” This ASU added the SEC guidance released on December 22, 2017 regarding the income tax accounting implication of the Tax Cuts and Jobs Act to ASC Topic 740. At December 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 completed its accounting for all of the tax effects of the Tax Cuts and Jobs Act. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in this update eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” The amendments in this update eliminate, add and modify certain disclosure requirements for defined benefit pension plans. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The guidance is effective for public companies beginning in the first quarter of 2020 and early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” that simplifies the accounting for share-based payment arrangements with nonemployees for goods and services. Under the ASU, the guidance on such payments to nonemployees is aligned with the accounting for share-based payments granted to employees, including the measurement of equity-classified awards, which is fixed at the grant date under the new guidance. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees and is effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company is assessing ASU 2018-07 and does not expect it to have a material impact on its accounting and disclosures. 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. In August 2018, the FASB amended the ASU with an additional (and optional) transition method to adopt the new leases standard. Under the new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption and the comparative periods presented in the financial statements continue to be in accordance with current GAAP. The Company will elect to use the package of practical expedients available under this amendment and will not elect the use of hindsight during transition. The Company has identified its leases or other contracts impacted by the new standard and is currently in the process of (i) finalizing the implementation of a software solution to account for leases under the new standard and (ii) updating its business processes and related policies, systems and controls to support recognition and disclosure under the new standard. The Company is still evaluating the impact that adopting this guidance will have on its consolidated financial statements. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2016 Denominator: Weighted average common shares for basic earnings per share 16,389,876 16,269,611 16,345,679 Effect of dilutive securities 133,723 — — Denominator for diluted earnings per share 16,523,599 16,269,611 16,345,679 |
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: 2018 2017 2016 (In thousands) Balance at beginning of year $ 172 $ 151 $ 132 Bad debt expense 73 68 285 Write-offs, net of recoveries (63 ) (47 ) (266 ) Balance at end of year $ 182 $ 172 $ 151 |
Schedule of change in inventory reserve | The following table summarizes the changes in the inventory reserves for the past three years: 2018 2017 2016 (In thousands) Balance at beginning of year $ 3,925 $ 4,366 $ 4,829 Provision for inventory write-downs 615 34 93 Deduction for inventory write-offs (831 ) (475 ) (556 ) Balance at end of year $ 3,709 $ 3,925 $ 4,366 |
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 |
Detail of Selected Balance Sh_2
Detail of Selected Balance Sheet Accounts (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Detail Of Selected Balance Sheet Accounts | |
Schedule of property and equipment | Property and equipment are stated at cost and consist of: At December 31, 2018 2017 (In thousands) Land $ 2,476 $ 2,476 Buildings 8,501 8,207 Machinery and equipment 14,867 14,165 25,844 24,848 Less accumulated depreciation 14,388 13,493 Total $ 11,456 $ 11,355 |
Schedule of intangible assets | Intangible assets consist of: At December 31, 2018 2017 (In thousands) Tradenames $ 5,936 $ 5,996 Customer relationships 18,620 18,620 24,556 24,616 Less accumulated amortization: Tradenames — — Customer relationships 13,377 12,601 13,377 12,601 Total $ 11,179 $ 12,015 |
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 Amortization Expense (In thousands) 2019 $ 777 2020 777 2021 777 2022 777 2023 777 2024 777 2025 583 |
Schedule of goodwill | At December 31, 2018 2017 (In thousands) Balance at beginning of year $ 22,353 $ 22,770 Less purchase price adjustment — 417 Balance at end of year (1) $ 22,353 $ 22,353 (1) The balance is net of $12.6 million of accumulated impairment losses. |
Schedule of accrued and other current liabilities | Accrued and other current liabilities consist of: At December 31, 2018 2017 (In thousands) Customer rebates $ 6,163 $ 5,648 Payroll, commissions, and bonuses 3,047 3,056 Accrued inventory purchases 5,140 4,796 Property taxes 1,041 943 Freight 689 318 Refund liability 435 — Professional fees 415 448 Accrued interest 259 206 Other 2,043 1,408 Total $ 19,232 $ 16,823 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of principal repayment obligations | Principal repayment obligations for succeeding fiscal years are as follows: (In thousands) 2019 $ — 2020 71,316 Total $ 71,316 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision (benefit) for income taxes | The provision (benefit) for income taxes consists of: Year Ended December 31, 2018 2017 2016 (In thousands) Current: Federal $ 3,041 $ 1,280 $ (1,285 ) State 658 159 (95 ) Total current 3,699 1,439 (1,380 ) Deferred: Federal (1,246 ) 1,259 13 State (98 ) 55 (7 ) Total deferred (1,344 ) 1,314 6 Total $ 2,355 $ 2,753 $ (1,374 ) |
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, 2018 2017 2016 Federal statutory rate 21.0 % 35.0 % 35.0 % State taxes, net of federal benefit 4.3 4.2 1.7 Impairment, non-deductible portion 0.1 — (6.6 ) Share-based compensation 1.2 15.2 (9.0 ) Non-deductible items 2.1 4.6 (3.9 ) Valuation allowance (9.5 ) 41.0 — Tax reform rate change — 12.9 — Other 2.2 (4.1 ) 1.4 Total effective tax rate 21.4 % 108.8 % 18.6 % |
Schedule of deferred taxes | Significant components of the Company’s deferred taxes were as follows: Year Ended December 31, 2018 2017 (In thousands) Deferred tax assets: Uniform capitalization adjustment $ 1,469 $ 1,272 Inventory valuation 1,179 1,334 Accounts receivable allowance 45 51 Stock compensation expense 681 725 Property and equipment 31 62 Other 548 134 Total deferred tax assets 3,953 3,578 Deferred tax liabilities Goodwill 649 460 Intangibles 2,315 2,385 Other 59 109 Total deferred tax liabilities 3,023 2,954 Less: Valuation allowance — 1,038 Net deferred tax assets/(liabilities) $ 930 $ (414 ) |
Retirement-related Benefits (Ta
Retirement-related Benefits (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of retirement-related Benefits | The fair value of the assets of the defined benefit plan were as follows: At December 31, 2018 2017 (In thousands) Equity mutual funds $ 701 $ 740 Fixed income – corporate bonds 326 326 Total fair value of assets $ 1,027 $ 1,066 |
Incentive Plans (Tables)
Incentive Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | All granted stock options have vested, with the last grant having an expiration date of December 20, 2021. The following summarizes stock option activity and related information: 2018 Options (in 000’s) Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding-Beginning of year 223 $ 13.10 $ — 2.84 Granted — — Exercised — — Forfeited (30 ) 11.17 Expired (39 ) 13.42 Outstanding-End of year 154 13.40 $ — 2.52 Exercisable-End of year 154 13.40 $ — 2.52 |
Schedule of restricted stock activity | The following summarizes restricted stock activity for the year ended December 31, 2018: 2018 Shares Units Shares (in 000’s) Weighted Average Market Value at Grant Date Shares (in 000’s) Weighted Average Market Value at Grant Date Non-vested -Beginning of year 238 $ 7.33 40 $ 7.50 Granted 133 6.51 43 7.47 Vested (99 ) 7.61 (60 ) 7.65 Cancelled/Forfeited (13 ) 7.63 (5 ) 7.65 Expired — — — — Cash awards converted to equity — — 197 7.65 Non-vested -End of year 259 $ 6.78 215 $ 7.59 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating leases | Future minimum lease payments under non-cancelable operating leases with initial terms of one year or more consisted of the following at December 31, 2018: (In thousands) 2019 $ 3,868 2020 3,026 2021 2,698 2022 2,550 2023 1,410 Thereafter 1,575 Total minimum lease payments $ 15,127 |
Select Quarterly Financial Da_2
Select Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018. The unaudited information has been prepared on the same basis as the audited consolidated financial statements. Year Ended December 31, 2018 Fourth Quarter Third Quarter Second Quarter First Quarter (in thousands, except per share data) Sales $ 87,906 $ 90,074 $ 93,852 $ 85,026 Gross profit $ 20,979 $ 21,393 $ 22,347 $ 20,489 Operating income $ 3,190 $ 3,046 $ 4,392 $ 3,270 Net income $ 1,628 $ 2,455 $ 2,606 $ 1,947 Earnings per share: Basic $ 0.10 $ 0.15 $ 0.16 $ 0.12 (1) Diluted $ 0.10 $ 0.15 $ 0.16 $ 0.12 (1) Year Ended December 31, 2017 Fourth Quarter Third Quarter Second Quarter First Quarter (in thousands, except per share data) Sales $ 82,146 $ 81,196 $ 75,646 $ 78,709 Gross profit $ 20,843 $ 18,570 $ 16,318 $ 16,931 Operating income (loss) $ 2,969 $ 2,047 $ (162 ) $ (250 ) Net income (loss) $ 1,996 $ (1,711 ) $ (54 ) $ (453 ) Earnings (loss) per share: Basic $ 0.12 (1) $ (0.11 ) $ (0.00 ) $ (0.03 ) Diluted $ 0.12 (1) $ (0.11 ) $ (0.00 ) $ (0.03 ) (1) The “two-class” method was used to calculate earnings per share which resulted in the same value. |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Denominator: | |||
Weighted average common shares for basic earnings per share | 16,389,876 | 16,269,611 | 16,345,679 |
Effect of dilutive securities | 133,723 | ||
Denominator for diluted earnings per share | 16,523,599 | 16,269,611 | 16,345,679 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | $ 172 | $ 151 | $ 132 |
Bad debt expense | 73 | 68 | 285 |
Write-offs, net of recoveries | (63) | (47) | (266) |
Balance at end of year | $ 182 | $ 172 | $ 151 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in the inventory reserves [Roll Forward] | |||
Balance at beginning of year | $ 3,925 | $ 4,366 | $ 4,829 |
Provision for inventory write-downs | 615 | 34 | 93 |
Deduction for inventory write-offs | (831) | (475) | (556) |
Balance at end of year | $ 3,709 | $ 3,925 | $ 4,366 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies (Details 3) | 12 Months Ended |
Dec. 31, 2018 | |
Buildings [Member] | Minimum [Member] | |
Estimated useful lives | 25 years |
Buildings [Member] | Maximum [Member] | |
Estimated useful lives | 30 years |
Machinery And Equipment [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Machinery And Equipment [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies (Details Narrative) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018USD ($)Segmentshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($) | ||
Options to purchase common stock | shares | 298,406 | 808,391 | 685,054 | ||
Allowance for doubtful accounts | $ 182 | $ 172 | $ 151 | $ 132 | |
Reserve for returns and allowances | 400 | ||||
Inventory valuation reserves | 3,709 | 3,925 | 4,366 | $ 4,829 | |
Depreciation expense | 1,400 | 1,400 | $ 1,300 | ||
Goodwill | [1] | $ 22,353 | $ 22,353 | ||
Percentage of goodwill | 11.00% | ||||
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 Company. | No single customer accounted for 10% or more of the Company. | No single customer accounted for 10% or more of the Company. | ||
Advertising expenses | $ 500 | $ 500 | $ 400 | ||
Customer Relationships [Member] | Minimum [Member] | |||||
Estimated useful lives, intagible assets | 6 years | ||||
Customer Relationships [Member] | Maximum [Member] | |||||
Estimated useful lives, intagible assets | 9 years | ||||
[1] | The balance is net of $12.6 million of accumulated impairment losses. |
Detail of Selected Balance Sh_3
Detail of Selected Balance Sheet Accounts (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Gross | $ 25,844 | $ 24,848 |
Less accumulated depreciation | 14,388 | 13,493 |
Total | 11,456 | 11,355 |
Land [Member] | ||
Gross | 2,476 | 2,476 |
Buildings [Member] | ||
Gross | 8,501 | 8,207 |
Machinery And Equipment [Member] | ||
Gross | $ 14,867 | $ 14,165 |
Detail of Selected Balance Sh_4
Detail of Selected Balance Sheet Accounts (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Finite lived intangible assets | ||
Less accumulated amortization: | $ 13,377 | $ 12,601 |
Intangible assets: | ||
Gross | 24,556 | 24,616 |
Total | 11,179 | 12,015 |
Customer Relationships [Member] | ||
Finite lived intangible assets | ||
Finite lived intangible assets, gross | 18,620 | 18,620 |
Less accumulated amortization: | 13,377 | 12,601 |
Tradenames [Member] | ||
Indefinite lived intangible assets: | ||
Gross | $ 5,936 | $ 5,996 |
Detail of Selected Balance Sh_5
Detail of Selected Balance Sheet Accounts (Details 2) $ in Thousands | Dec. 31, 2018USD ($) |
Annual Amortization Expense | |
2019 | $ 777 |
2020 | 777 |
2021 | 777 |
2022 | 777 |
2023 | 777 |
2024 | 777 |
2025 | $ 583 |
Detail of Selected Balance Sh_6
Detail of Selected Balance Sheet Accounts (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Goodwill [Roll Forward] | |||
Balance at beginning of year | $ 22,353 | $ 22,770 | |
Less purchase price adjustment | 417 | ||
Balance at end of year | [1] | $ 22,353 | $ 22,353 |
[1] | The balance is net of $12.6 million of accumulated impairment losses. |
Detail of Selected Balance Sh_7
Detail of Selected Balance Sheet Accounts (Details 4) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued and Other Current Liabilities | ||
Customer rebates | $ 6,163 | $ 5,648 |
Payroll, commissions, and bonuses | 3,047 | 3,056 |
Accrued inventory purchases | 5,140 | 4,796 |
Property taxes | 1,041 | 943 |
Freight | 689 | 318 |
Refund liability | 435 | |
Professional fees | 415 | 448 |
Accrued interest | 259 | 206 |
Other | 2,043 | 1,408 |
Total | $ 19,232 | $ 16,823 |
Detail of Selected Balance Sh_8
Detail of Selected Balance Sheet Accounts (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accumulated amortization, intagible assets | $ 13,377 | $ 12,601 | |
Amortization expense, intagible assets | $ 800 | $ 1,400 | $ 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 In_2
Impairment of Goodwill and Intangible Assets (Details Narrative) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2016USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | ||
Goodwill, impairment loss | $ 60 | $ 2,384 | |||
Goodwill carrying value | [1] | $ 22,353 | $ 22,353 | ||
Houston Wire & Cable (HWC) Reporting Unit [Member] | |||||
Goodwill, impairment loss | $ 2,400 | ||||
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] | Measurement Input, Long-term Revenue Growth Rate [Member] | |||||
Goodwill fair value | 0 | ||||
Houston Wire & Cable (HWC) Reporting Unit [Member] | Measurement Input, Long-term Revenue Growth Rate [Member] | Income Approach [Member] | Minimum [Member] | |||||
Measurement input | 0.03 | ||||
Houston Wire & Cable (HWC) Reporting Unit [Member] | Measurement Input, Long-term Revenue Growth Rate [Member] | Income Approach [Member] | Maximum [Member] | |||||
Measurement input | 0.07 | ||||
Houston Wire & Cable (HWC) Reporting Unit [Member] | Discount Rate [Member] | Income Approach [Member] | |||||
Measurement input | 0.11 | ||||
Southern Reporting Unit [Member] | Tradenames [Member] | |||||
Impairment of intangible assets (excluding goodwill) | 100 | $ 100 | |||
Description of valuation assumption | The fair values of the reporting units were estimated using a discounted cash flow model (income approach) and a guideline public company method (market approach), giving 50% weight to each. The material assumptions used included cash flows based on future expected performance for the reporting units, weighted average costs of capital ranging from 11.5% to 15%, a long-term growth rate of 3% for the income approach and a control premium of 25.0% for the guideline public company method. | ||||
Southern Reporting Unit [Member] | Tradenames [Member] | Level 3 Measurement Approach [Member] | |||||
Fair value for tradename | $ 4,500 | ||||
[1] | The balance is net of $12.6 million of accumulated impairment losses. |
Debt (Details)
Debt (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2019 | |
2020 | 71,316 |
Total | $ 71,316 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ in Thousands | Oct. 03, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt | $ 71,316 | $ 73,555 | ||
Weighted average interest rates | 4.10% | 3.20% | ||
Current outstanding amount capacity | $ 28,700 | |||
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 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% | |||
Average outstanding amount capacity | $ 24,000 | |||
Unused borrowing facility | $ 100 | $ 100 | $ 200 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | |||
Federal | $ 3,041 | $ 1,280 | $ (1,285) |
State | 658 | 159 | (95) |
Total current | 3,699 | 1,439 | (1,380) |
Deferred: | |||
Federal | (1,246) | 1,259 | 13 |
State | (98) | 55 | (7) |
Total deferred | (1,344) | 1,314 | 6 |
Total | $ 2,355 | $ 2,753 | $ (1,374) |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory rate | 21.00% | 35.00% | 35.00% |
State taxes, net of federal benefit | 4.30% | 4.20% | 1.70% |
Impairment, non-deductible portion | 0.10% | (6.60%) | |
Share-based compensation | 1.20% | 15.20% | (9.00%) |
Non-deductible items | 2.10% | 4.60% | (3.90%) |
Valuation allowance | (9.50%) | 41.00% | |
Tax reform rate change | 12.90% | ||
Other | 2.20% | (4.10%) | 1.40% |
Total effective tax rate | 21.40% | 108.80% | 18.60% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Uniform capitalization adjustment | $ 1,469 | $ 1,272 |
Inventory valuation | 1,179 | 1,334 |
Accounts receivable allowance | 45 | 51 |
Stock compensation expense | 681 | 725 |
Property and equipment | 31 | 62 |
Other | 548 | 134 |
Total deferred tax assets | 3,953 | 3,578 |
Deferred tax liabilities | ||
Goodwill | 649 | 460 |
Intangibles | 2,315 | 2,385 |
Other | 59 | 109 |
Total deferred tax liabilities | 3,023 | 2,954 |
Less: Valuation allowance | 1,038 | |
Net deferred tax assets/(liabilities) | $ 930 | $ (414) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Previous federal income tax rate | 35.00% | |||
Federal income tax rate | 21.00% | 35.00% | 35.00% | |
Valuation allowance | $ 1,038 | |||
Provisional income tax expense | $ 300 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 07, 2014 | |
Dividend paid in cash | $ 48 | $ 81 | $ 2,495 | |
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 | |||
2017 Stock Plan [Member] | ||||
Number of shares surrender withholding taxes | 25,368 | |||
2006 Stock Plan [Member] | ||||
Number of shares surrender withholding taxes | 27,156 | |||
Share Repurchase Program [Member] | Common Stock [Member] | ||||
Maximum number of shares authorized | $ 25,000 | |||
Number of shares repurchases | 366,820 | |||
Value of shares repurchases | $ 2,200 |
Retirement-related Benefits (De
Retirement-related Benefits (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Total fair value of assets | $ 1,027 | $ 1,066 |
Equity Mutual Funds [Member] | ||
Total fair value of assets | 701 | 740 |
Fixed Income - Corporate Bonds [Member] | ||
Total fair value of assets | $ 326 | $ 326 |
Retirement-related Benefits (_2
Retirement-related Benefits (Details Narrative) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)Employee | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Benefit obligation | $ 1,100 | $ 1,000 | |
Discount rate | 4.18% | 3.77% | |
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 | 15 | ||
Number of retired employees under defined benefit plan | Employee | 16 | ||
Number of terminated employees under defined benefit plan | Employee | 6 | ||
Defined Benefit Plan contribution for 2019 | $ 100 | ||
Defined benefit plan annual benefit payments | 100 | ||
Maximum [Member] | |||
Contribution | $ 100 | $ 100 | $ 100 |
Equity Securities [Member] | |||
Weighted average asset allocations for the defined benefit plan | 68% | 69% | |
Debt Securities [Member] | |||
Weighted average asset allocations for the defined benefit plan | 32% | 31% |
Incentive Plans (Details)
Incentive Plans (Details) | 12 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding-Beginning of year | shares | 223,000 |
Granted | shares | |
Exercised | shares | |
Forfeited | shares | (30,000) |
Expired | shares | (39,000) |
Outstanding-End of year | shares | 154,000 |
Exercisable-End of year | shares | 154,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding-Beginning of year | $ / shares | $ 13.10 |
Granted | $ / shares | |
Exercised | $ / shares | |
Forfeited | $ / shares | 11.17 |
Expired | $ / shares | 13.42 |
Outstanding-End of year | $ / shares | 13.40 |
Exercisable-End of year | $ / shares | $ 13.40 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Aggregate Intrinsic Value [Roll Forward] | |
Outstanding-Beginning of year | $ | |
Outstanding-End of year | $ | |
Exercisable-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 | 2 years 10 months 2 days |
Outstanding-End of year | 2 years 6 months 7 days |
Exercisable - End of year | 2 years 6 months 7 days |
Incentive Plans (Details 1)
Incentive Plans (Details 1) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
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 | 238,000 |
Granted | 133,000 |
Vested | (99,000) |
Cancelled/Forfeited | (13,000) |
Expired | |
Cash awards converted to equity | |
Non-vested -End of year | 259,000 |
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 | $ 7.33 |
Granted | $ / shares | 6.51 |
Vested | $ / shares | 7.61 |
Cancelled/Forfeited | $ / shares | 7.63 |
Expired | $ / shares | |
Cash awards converted to equity | |
Non-vested -End of year | $ / shares | $ 6.78 |
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 | 40,000 |
Granted | 43,000 |
Vested | (60,000) |
Cancelled/Forfeited | (5,000) |
Expired | |
Cash awards converted to equity | 197,000 |
Non-vested -End of year | 215,000 |
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 | $ 7.50 |
Granted | $ / shares | 7.47 |
Vested | $ / shares | 7.65 |
Cancelled/Forfeited | $ / shares | 7.65 |
Expired | $ / shares | |
Cash awards converted to equity | 7.65 |
Non-vested -End of year | $ / shares | $ 7.59 |
Incentive Plans (Details Narrat
Incentive Plans (Details Narrative) - USD ($) $ in Thousands | Nov. 06, 2018 | Jun. 01, 2018 | May 08, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 04, 2018 | Aug. 04, 2017 |
Stock-based compensation cost | $ 1,298 | $ 1,176 | $ 856 | |||||
Income tax benefit recognized for stock-based compensation arrangements | 200 | 200 | 300 | |||||
Equity Award [Member] | ||||||||
Stock-based compensation cost | 1,000 | |||||||
Liability Award [Member] | ||||||||
Stock-based compensation cost | 200 | |||||||
2017 Stock Plan [Member] | ||||||||
Excess tax benefits recorded financing cash flows | 0 | |||||||
Unrecognized compensation cost related to non-vested | $ 2,000 | |||||||
Unrecognized compensation cost related to non-vested, period | 29 months | |||||||
Number of shares available for future grants | 627,283 | |||||||
2017 Stock Plan [Member] | Restricted Stock Units [Member] | ||||||||
Liability reclassified to additional paid-in-capital | $ 400 | |||||||
Increase in fair value | $ 100 | |||||||
2017 Stock Plan [Member] | Restricted Stock Units [Member] | Minimum [Member] | ||||||||
Term of vesting period | 1 year | |||||||
2017 Stock Plan [Member] | Restricted Stock Units [Member] | Maximum [Member] | ||||||||
Term of vesting period | 5 years | |||||||
2017 Stock Plan [Member] | Non-Employee Director [Member] | Restricted Stock Units [Member] | ||||||||
Number of shares granted under plan | 4,950 | 6,667 | 31,372 | |||||
Total grant-date fair value of options vested | $ 30 | $ 55 | $ 60 | |||||
Description of vesting rights | Each award of restricted stock units vests at the date of the 2019 Annual Meeting of Stockholders. | |||||||
2017 Stock Plan [Member] | Management [Member] | Restricted Stock Awards [Member] | ||||||||
Number of shares granted under plan | 28,144 | |||||||
Number of shares grants | 44,357 | |||||||
Description of vesting term | Of the 28,144 shares granted, 26,144 shares vest in one third increments on the first, second and third anniversaries of the date of grant and the remaining 2,000 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. | |||||||
2017 Stock Plan [Member] | Employees And Directors [Member] | ||||||||
Number of shares granted under plan | 1,000,000 | |||||||
2017 Stock Plan [Member] | President and CEO [Member] | Restricted Stock Awards [Member] | ||||||||
Number of shares grants | 48,387 | |||||||
2017 Stock Plan [Member] | Chief Financial Officer [Member] | Restricted Stock Awards [Member] | ||||||||
Number of shares grants | 12,097 | |||||||
2006 Stock Plan [Member] | ||||||||
Excess tax benefits recorded financing cash flows | 0 | 0 | ||||||
2006 Stock Plan [Member] | Stock Option [Member] | ||||||||
Total intrinsic value of options exercised | $ 0 | 0 | 0 | |||||
Total grant-date fair value of options vested | $ 0 | $ 200 | $ 300 | |||||
Expiration date | Dec. 20, 2021 | |||||||
Description of vesting rights | 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. | |||||||
2006 Stock Plan [Member] | Stock Option [Member] | Minimum [Member] | ||||||||
Term of vesting period | 3 years | |||||||
2006 Stock Plan [Member] | Stock Option [Member] | Maximum [Member] | ||||||||
Term of vesting period | 5 years |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 3,868 |
2020 | 3,026 |
2021 | 2,698 |
2022 | 2,550 |
2023 | 1,410 |
Thereafter | 1,575 |
Total minimum lease payments | $ 15,127 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 3,700 | $ 3,500 | $ 2,600 |
Purchase commitments for fixed inventory | 54,500 | ||
Expected post-remediation liability | $ 200 | ||
Amortized over the remaining term | 54 months |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Revolving Credit Facility [Member] - Subsequent Event [Member] $ in Thousands | Mar. 12, 2019USD ($) |
Line of credit revoling | $ 100,000 |
Expiration date | Mar. 12, 2024 |
Select Quarterly Financial Da_3
Select Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||
Sales | $ 87,906 | $ 90,074 | $ 93,852 | $ 85,026 | $ 82,146 | $ 81,196 | $ 75,646 | $ 78,709 | $ 356,858 | $ 317,697 | $ 261,644 | ||
Gross profit | 20,979 | 21,393 | 22,347 | 20,489 | 20,843 | 18,570 | 16,318 | 16,931 | 85,208 | 72,662 | 52,950 | ||
Operating income | 3,190 | 3,046 | 4,392 | 3,270 | 2,969 | 2,047 | (162) | (250) | 13,898 | 4,604 | (6,535) | ||
Net income | $ 1,628 | $ 2,455 | $ 2,606 | $ 1,947 | $ 1,996 | $ (1,711) | $ (54) | $ (453) | $ 8,636 | $ (222) | $ (6,006) | ||
Earnings per share: | |||||||||||||
Basic (in dollars per share) | $ 0.10 | $ 0.15 | $ 0.16 | $ 0.12 | [1] | $ 0.12 | [1] | $ (0.11) | $ 0 | $ (0.03) | $ 0.53 | $ (0.01) | $ (0.37) |
Diluted (in dollars per share) | $ 0.10 | $ 0.15 | $ 0.16 | $ 0.12 | [1] | $ 0.12 | [1] | $ (0.11) | $ 0 | $ (0.03) | $ 0.52 | $ (0.01) | $ (0.37) |
Non-cash impairment charge | $ 60 | $ 2,384 | |||||||||||
[1] | The two-class method was used to calculate earnings per share which resulted in the same value. |