Houston Wire & Cable (HWCC) 10-Q 9 Aug 19 2019 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 01, 2019
Cover [Abstract]
Entity Registrant Name	Houston Wire & Cable CO
Entity Central Index Key	0001356949
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity File Number	000-52046
Entity Incorporation, State or Country Code	DE
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	HWCC
Security Exchange Name	NASDAQ
Entity Reporting Status Current	Yes
Entity Interactive Data Current	Yes
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Filer Category	Accelerated Filer
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,645,182
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019

Consolidated Balance Sheets (un

Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash		$ 1,393
Accounts receivable, net:
Trade	55,877	52,946
Other	3,313	6,847
Inventories, net	106,273	94,325
Income taxes	577	435
Prepaids	2,108	737
Other current assets	490
Total current assets	168,638	156,683
Property and equipment, net	12,033	11,456
Intangible assets, net	10,790	11,179
Goodwill	22,353	22,353
Operating lease right-of-use assets, net	11,176
Deferred income taxes	571	930
Other assets	490	456
Total assets	226,051	203,057
Current liabilities:
Book overdraft	330
Trade accounts payable	13,359	11,253
Accrued and other current liabilities	21,612	19,232
Operating lease liabilities	2,961
Total current liabilities	38,262	30,485
Debt	73,107	71,316
Operating lease long term liabilities	8,628
Other long term liabilities	706	578
Total liabilities	120,703	102,379
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: 16,645,182 and 16,611,651 outstanding at June 30, 2019 and December 31, 2018, respectively	21	21
Additional paid-in-capital	53,620	53,514
Retained earnings	110,003	105,975
Treasury stock	(58,296)	(58,832)
Total stockholders' equity	105,348	100,678
Total liabilities and stockholders' equity	$ 226,051	$ 203,057

Consolidated Balance Sheets (_2

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
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	16,645,182	16,611,651

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Sales	$ 85,326	$ 93,852	$ 170,596	$ 178,878
Cost of sales	64,789	71,505	128,800	136,042
Gross profit	20,537	22,347	41,796	42,836
Operating expenses:
Salaries and commissions	9,244	9,906	18,424	19,100
Other operating expenses	7,729	7,508	15,392	14,988
Depreciation and amortization	534	541	1,087	1,086
Total operating expenses	17,507	17,955	34,903	35,174
Operating income	3,030	4,392	6,893	7,662
Interest expense	738	773	1,479	1,417
Income before income taxes	2,292	3,619	5,414	6,245
Income tax expense	649	1,013	1,487	1,692
Net income	$ 1,643	$ 2,606	$ 3,927	$ 4,553
Earnings per share:
Basic (in dollars per share)	$ 0.1	$ 0.16	$ 0.24	$ 0.28
Diluted (in dollars per share)	$ 0.1	$ 0.16	$ 0.24	$ 0.28
Weighted average common shares outstanding:
Basic (in shares)	16,504,471	16,387,112	16,491,236	16,368,610
Diluted (in shares)	16,597,496	16,489,671	16,571,113	16,459,736

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
Balance at Beginning at Dec. 31, 2017	$ 21	$ 54,006	$ 97,336	$ (60,619)	$ 90,744
Balance at Beginning (in shares) at Dec. 31, 2017	20,988,952			(4,497,771)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			1,947		1,947
Repurchase of treasury shares				$ (63)	(63)
Repurchase of treasury shares (in shares)				(8,798)
Amortization of unearned stock compensation		158			158
Balance at Ending at Mar. 31, 2018	$ 21	54,164	99,283	$ (60,682)	92,786
Balance at Ending (in shares) at Mar. 31, 2018	20,988,952			(4,506,569)
Balance at Beginning at Dec. 31, 2017	$ 21	54,006	97,336	$ (60,619)	90,744
Balance at Beginning (in shares) at Dec. 31, 2017	20,988,952			(4,497,771)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income					4,553
Balance at Ending at Jun. 30, 2018	$ 21	54,147	101,889	$ (60,025)	96,032
Balance at Ending (in shares) at Jun. 30, 2018	20,988,952			(4,462,513)
Balance at Beginning at Mar. 31, 2018	$ 21	54,164	99,283	$ (60,682)	92,786
Balance at Beginning (in shares) at Mar. 31, 2018	20,988,952			(4,506,569)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			2,606		2,606
Repurchase of treasury shares				$ (75)	(75)
Repurchase of treasury shares (in shares)				(10,273)
Amortization of unearned stock compensation		304			304
Amortization of reclassed liability awards		411			411
Impact of released vested restricted stock units		(353)		$ 353
Impact of released vested restricted stock units (in shares)				26,185
Issuance of restricted stock award		(379)		$ 379
Issuance of restricted stock award (in shares)				28,144
Balance at Ending at Jun. 30, 2018	$ 21	54,147	101,889	$ (60,025)	96,032
Balance at Ending (in shares) at Jun. 30, 2018	20,988,952			(4,462,513)
Balance at Beginning at Dec. 31, 2018	$ 21	53,514	105,975	$ (58,832)	100,678
Balance at Beginning (in shares) at Dec. 31, 2018	20,988,952			(4,377,301)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			2,284		2,284
Repurchase of treasury shares				$ (8)	(8)
Repurchase of treasury shares (in shares)				(1,506)
Amortization of unearned stock compensation		342			342
Settlement of director's deferred compensation				$ 16	16
Settlement of director's deferred compensation (in shares)				2,251
Cumulative effect of accounting change (Note 7)			101		101
Balance at Ending at Mar. 31, 2019	$ 21	53,856	108,360	$ (58,824)	103,413
Balance at Ending (in shares) at Mar. 31, 2019	20,988,952			(4,376,556)
Balance at Beginning at Dec. 31, 2018	$ 21	53,514	105,975	$ (58,832)	100,678
Balance at Beginning (in shares) at Dec. 31, 2018	20,988,952			(4,377,301)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income					3,927
Balance at Ending at Jun. 30, 2019	$ 21	53,620	110,003	$ (58,296)	105,348
Balance at Ending (in shares) at Jun. 30, 2019	20,988,952			(4,343,770)
Balance at Beginning at Mar. 31, 2019	$ 21	53,856	108,360	$ (58,824)	103,413
Balance at Beginning (in shares) at Mar. 31, 2019	20,988,952			(4,376,556)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			1,643		1,643
Repurchase of treasury shares				$ (73)	(73)
Repurchase of treasury shares (in shares)				(11,951)
Amortization of unearned stock compensation		365			365
Impact of released vested restricted stock units		(601)		$ 601
Impact of released vested restricted stock units (in shares)				44,737
Balance at Ending at Jun. 30, 2019	$ 21	$ 53,620	$ 110,003	$ (58,296)	$ 105,348
Balance at Ending (in shares) at Jun. 30, 2019	20,988,952			(4,343,770)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating activities
Net income	$ 3,927	$ 4,553
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	1,087	1,086
Amortization of unearned stock compensation	707	703
Non-cash lease expense	1,968
Provision for refund liability	471	108
Provision for inventory obsolescence	459	191
Deferred income taxes	460	(82)
Other non-cash items	83	21
Changes in operating assets and liabilities:
Accounts receivable	75	(5,403)
Inventories	(12,407)	105
Prepaids	(1,371)	196
Other assets	(550)	(12)
Lease payments	(1,963)
Book overdraft	330	(1,716)
Trade accounts payable	2,106	(439)
Accrued and other current liabilities	2,235	(4,483)
Income taxes	(142)	(399)
Other operating activities	359	(104)
Net cash used in operating activities	(2,166)	(5,675)
Investing activities
Expenditures for property and equipment	(875)	(741)
Net cash used in investing activities	(875)	(741)
Financing activities
Borrowings on revolver	175,417	179,994
Payments on revolver	(173,626)	(173,401)
Payment of dividends	(30)	(39)
Purchase of treasury stock/stock surrendered on vested awards	(65)	(138)
Lease payments	(48)
Net cash provided by financing activities	1,648	6,416
Net change in cash	(1,393)
Cash at beginning of period	1,393
Cash at end of period

Basis of Presentation and Princ

Basis of Presentation and Principles of Consolidation	6 Months Ended
	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation and Principles of Consolidation	1. Basis of Presentation and Principles of Consolidation Houston Wire & Cable Company (the “Company”), through its wholly owned subsidiaries, provides industrial products through twenty-one locations in fourteen states throughout the United States. The Company has no other business activity. The consolidated financial statements as of June 30, 2019 and for the three and six months ended June 30, 2019 and 2018 have been prepared following accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. All significant intercompany balances and transactions have been eliminated. The Company has evaluated subsequent events through the time these financial statements in this Form 10-Q were filed with the Securities and Exchange Commission (the “SEC”). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates are those relating to the 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. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC. 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 ASUs that were recently adopted by the Company. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under the new guidance as amended, a lessee is required to recognize a right-of-use asset and a lease liability for leases greater than 1 year, both finance and operating leases. This update was effective for public companies for fiscal years beginning after December 15, 2018. Under the transition rules, 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 previously-existing GAAP. The Company adopted this ASU effective January 1, 2019. See Note 7 for detailed information. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which 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 superseded Subtopic 505-50, “Equity - Equity-Based Payments to Non-Employees,” and was effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company adopted this ASU in the first quarter of 2019, and the adoption did not have a material impact on the Company’s consolidated financial statements. 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 the FASB’s disclosure framework project. The guidance is effective for public companies beginning in the first quarter of 2020. The Company is currently assessing the impact of this ASU on its consolidated financial statements. 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. The Company is currently assessing the impact of this ASU on its consolidated financial statements. 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. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this update amend the guidance of the impairment of financial instruments and add an impairment model, known as the current expected credit loss (CECL) model. The CECL model is designed to capture expected credit losses through the establishment of an allowance account, which will be presented as an offset to the amortized cost basis of the related financial asset. The guidance is effective for interim and annual periods beginning after December 15, 2019. The Company is currently assessing the impact of this ASU on its consolidated financial statements.

Earnings per Share

Earnings per Share	6 Months Ended
	Jun. 30, 2019
Earnings Per Share [Abstract]
Earnings per Share	2. Earnings per Share Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share include the dilutive effects of options and unvested restricted stock awards and units. The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Denominator: Weighted average common shares for basic earnings per share 16,504,471 16,387,112 16,491,236 16,368,610 Effect of dilutive securities 93,025 102,559 79,877 91,126 Weighted average common shares for diluted earnings per share 16,597,496 16,489,671 16,571,113 16,459,736 Stock awards to purchase 275,494 and 300,117 shares of common stock for the three months ended June 30, 2019 and 2018, respectively, and 286,141 and 286,121 shares for the six months ended June 30, 2019 and 2018, respectively, were not included in the diluted net income per share calculation as their inclusion would have been anti-dilutive.

Debt

Debt	6 Months Ended
	Jun. 30, 2019
Debt Disclosure [Abstract]
Debt	3. Debt On March 12, 2019, the Company, as guarantor, HWC Wire & Cable Company and Vertex, as borrowers, and Bank of America, N.A., as agent and lender, entered into a Second Amendment to the Fourth Amended and Restated Loan and Security Agreement (such agreement, as so amended, the “Loan Agreement”). The Second Amendment extends the expiration date of the Company’s $100 million revolving credit facility until March 12, 2024. 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 March 12, 2024. At June 30, 2019, the Company was in compliance with the availability-based covenants governing its indebtedness. The carrying amount of long-term debt approximates fair value as it bears interest at variable rates. The fair value is a Level 2 measurement as defined in ASC Topic 820, “Fair Value Measurement.”

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Income Taxes	4. Income Taxes The Company calculates its provision for income taxes during interim reporting periods by applying the estimated annual effective tax rate for the full fiscal year to pre-tax income or loss, excluding discrete items, for the reporting period.

Incentive Plans

Incentive Plans	6 Months Ended
	Jun. 30, 2019
Share-based Payment Arrangement [Abstract]
Incentive Plans	5. Incentive Plans Stock Option Awards There were no stock option awards granted during the first six months of 2019 or 2018. Restricted Stock Awards and Restricted Stock Units Following the Annual Meeting of Stockholders on May 7, 2019, the Company granted restricted stock units with a grant date value of $60,000 to each non-employee director who was elected and re-elected, for an aggregate of 58,920 restricted stock units. Each award of restricted stock units vests at the date of the 2020 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. On March 12, 2019, the Board of Directors granted 52,910 performance stock units to the Company’s President and CEO and 13,228 performance stock units to the CFO. Each grant of performance stock units vests on December 31, 2021, based on and subject to the Company’s achievement of cumulative EBITDA and stock price performance goals over a three-year period, as long as the grantee is then employed by the Company, and upon vesting will be settled in shares of our common stock. Any dividends declared will be accrued and paid to the grantee if and when the related shares vest. Total stock-based compensation cost was $0.4 million for each of the three months ended June 30, 2019 and 2018, and $0.7 million for each of the six months ended June 30, 2019 and 2018, and is included in salaries and commissions for employees, and in other operating expenses for non-employee directors.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	6. Commitments and Contingencies As a result of unfavorable lease terms relative to market for a facility in Massachusetts 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 48 months at June 30, 2019. See Note 8. The Company had outstanding under the Loan Agreement letters of credit totaling $1.7 million to certain vendors as of June 30, 2019. There are no legal proceedings pending against or involving the Company that, in management’s opinion, based on the current known facts and circumstances, are expected to have a material adverse effect on the Company’s consolidated financial position, cash flows, or results of operations.

Leases

Leases	6 Months Ended
	Jun. 30, 2019
Leases [Abstract]
Leases	7. Leases Effective January 1, 2019, the Company adopted ASU No. 2016-02, “Leases (Topic 842)” and the series of related ASUs that followed (collectively referred to as “Topic 842”). The most significant changes under the new guidance include clarification of the definition of a lease, and the requirements for lessees to recognize a right-of-use (ROU) asset and a lease liability for all qualifying leases with terms longer than twelve months in the consolidated balance sheet. In addition, under Topic 842, additional disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The Company elected the practical expedient available under ASU 2018-11 “Leases: Targeted Improvements,” which allows the Company to apply the transition provision for Topic 842 at the Company’s adoption date instead of at the earliest comparative period presented in the Company’s financial statements. Therefore, the Company recognized and measured leases existing at January 1, 2019 but without retrospective application. The Company also elected all other available practical expedients except the hindsight practical expedient. In electing the practical expedients, the Company utilized the transition practical expedient package whereby the Company did not reassess (i) whether any of the Company’s expired or existing contracts contain a lease, (ii) the classification for any expired or existing leases and (iii) initial direct costs for any existing leases. The impact of Topic 842 on the Company’s consolidated balance sheet as of January 1, 2019 was the recognition of ROU assets and lease liabilities for operating leases, while the Company’s accounting for finance leases remained substantially unchanged. The Company’s finance leases were immaterial prior to the adoption of Topic 842, and no change was made to the classification of these leases. As a result of the adoption of Topic 842, beginning retained earnings was impacted by $0.1 million and there was no impact to the income statement. The Company leases property including warehouse space, offices, vehicles and office equipment. The Company determines if an arrangement is a lease at inception. As part of the transition to the new standard, the Company reviewed agreements with suppliers, vendors, customers, and other outside parties to determine if any agreements met the definition of an embedded lease. This is based on the nature of the contracts reviewed, and various factors, including identified assets included in the agreement to which the Company has exclusive rights of control as described by Topic 842. The Company concluded that these are not material agreements with parties that would constitute an embedded lease. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Beginning January 1, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining lease payments over the remaining lease term as of January 1, 2019. The Company is required to determine a discount rate in order to calculate the present value of lease payments. If the rate is not included in the lease or cannot be readily determined, the Company uses its incremental secured borrowing rate based on lease term information available at the commencement date of the lease in determining the present value of lease payments. The Company recognizes lease components and non-lease components together and not as separate parts of a lease for all leases. The Company will exercise this practical expedient in the future by asset class. The expenses generated by the lease activity of the Company as lessee for the three months and six months ended June 30, 2019 were as follows: Three Months Six Months Lease Type Income Statement Classification June 30, 2019 (Dollars in thousands) Consolidated operating lease expense Operating expenses $ 982 $ 1,968 Consolidated financing lease amortization Operating expenses 33 50 Consolidated financing lease interest Interest expense 4 6 Consolidating financing lease expense 37 56 Net lease cost Operating expenses $ 1,019 $ 2,024 The value of the net assets and liabilities generated by the leasing activity of the Company as lessee as of June 30, 2019 were as follows: Lease Type Balance Sheet Classification Amount (Dollars in thousands) Total ROU operating lease assets (1) Operating lease right-of-use assets, net $ 11,176 Total ROU financing lease assets (2) Property and equipment, net 609 Total lease assets $ 11,785 Total current operating lease obligation Operating lease liabilities $ 2,961 Total current financing lease obligation Accrued and other current liabilities 169 Total current lease obligation $ 3,130 Total long term operating lease obligation Operating lease long term liabilities $ 8,628 Total long term financing lease obligation Other long term liabilities 451 Total long term lease obligation $ 9,079 (1) (2) The future minimum lease payments for finance and operating lease liabilities of the Company as lessee as of June 30, 2019 were as follows: Maturity Date of Lease Liabilities Operating Leases Financing Leases Total (Dollars in thousands) Year one $ 3,504 $ 192 $ 3,696 Year two 2,721 177 2,898 Year three 2,694 149 2,843 Year four 2,103 101 2,204 Year five 795 57 852 Subsequent years 1,290 — 1,290 Total lease payments 13,107 676 13,783 Less: Interest 1,518 56 1,574 Present value of lease liabilities $ 11,589 $ 620 $ 12,209 The weighted average remaining lease terms and discount rates of the leases held by the Company as of June 30, 2019 were as follows: Lease Type Weighted Average Weighted Average Operating leases 4.5 5.5 Financing leases 3.9 4.3 The cash outflows of the leasing activity of the Company as lessee for the six months ended June 30, 2019 were as follows: Cash Flow Source Classification Amount (Dollars in thousands) Operating cash outflows from operating leases Operating activities $ 1,957 Operating cash outflows from financing leases Operating activities 6 Financing cash outflows from financing leases Financing activities 48 During the six months ended June 30, 2019, the Company recorded non-cash ROU financing lease assets and corresponding financing lease obligations totaling $0.4 million related to new and modified lease agreements. Any operating leases, new or modified, as well as any sublease income for the six months ended June 30, 2019, are not material.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2019
Subsequent Events [Abstract]
Subsequent Events	8. Subsequent Events On July 22, 2019, the Company modified certain terms of the lease agreement with the landlord of Vertex’s Massachusetts facility, including early termination of the lease on November 30, 2019 and Vertex subleasing a portion of the space until the end of November. In connection with the modification, the Company will make a payment of approximately $2.5 million to the lessor. The Company will be relieved of $2.8 million of future rent payments, along with other future costs associated with the lease including property taxes, insurance, utilities and maintenance otherwise required in the original lease agreement.

Basis of Presentation and Pri_2

Basis of Presentation and Principles of Consolidation (Policies)	6 Months Ended
	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
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 ASUs that were recently adopted by the Company. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under the new guidance as amended, a lessee is required to recognize a right-of-use asset and a lease liability for leases greater than 1 year, both finance and operating leases. This update was effective for public companies for fiscal years beginning after December 15, 2018. Under the transition rules, 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 previously-existing GAAP. The Company adopted this ASU effective January 1, 2019. See Note 7 for detailed information. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which 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 superseded Subtopic 505-50, “Equity - Equity-Based Payments to Non-Employees,” and was effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company adopted this ASU in the first quarter of 2019, and the adoption did not have a material impact on the Company’s consolidated financial statements.
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 the FASB’s disclosure framework project. The guidance is effective for public companies beginning in the first quarter of 2020. The Company is currently assessing the impact of this ASU on its consolidated financial statements. 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. The Company is currently assessing the impact of this ASU on its consolidated financial statements. 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. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this update amend the guidance of the impairment of financial instruments and add an impairment model, known as the current expected credit loss (CECL) model. The CECL model is designed to capture expected credit losses through the establishment of an allowance account, which will be presented as an offset to the amortized cost basis of the related financial asset. The guidance is effective for interim and annual periods beginning after December 15, 2019. The Company is currently assessing the impact of this ASU on its consolidated financial statements.

Earnings per Share (Tables)

Earnings per Share (Tables)	6 Months Ended
	Jun. 30, 2019
Earnings Per Share [Abstract]
Schedule of diluted earnings per share	The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Denominator: Weighted average common shares for basic earnings per share 16,504,471 16,387,112 16,491,236 16,368,610 Effect of dilutive securities 93,025 102,559 79,877 91,126 Weighted average common shares for diluted earnings per share 16,597,496 16,489,671 16,571,113 16,459,736

Leases (Tables)

Leases (Tables)	6 Months Ended
	Jun. 30, 2019
Leases [Abstract]
Schedule of leasing activity as lessee	The expenses generated by the lease activity of the Company as lessee for the three months and six months ended June 30, 2019 were as follows: Three Months Six Months Lease Type Income Statement Classification June 30, 2019 (Dollars in thousands) Consolidated operating lease expense Operating expenses $ 982 $ 1,968 Consolidated financing lease amortization Operating expenses 33 50 Consolidated financing lease interest Interest expense 4 6 Consolidating financing lease expense 37 56 Net lease cost Operating expenses $ 1,019 $ 2,024 The value of the net assets and liabilities generated by the leasing activity of the Company as lessee as of June 30, 2019 were as follows: Lease Type Balance Sheet Classification Amount (Dollars in thousands) Total ROU operating lease assets (1) Operating lease right-of-use assets, net $ 11,176 Total ROU financing lease assets (2) Property and equipment, net 609 Total lease assets $ 11,785 Total current operating lease obligation Operating lease liabilities $ 2,961 Total current financing lease obligation Accrued and other current liabilities 169 Total current lease obligation $ 3,130 Total long term operating lease obligation Operating lease long term liabilities $ 8,628 Total long term financing lease obligation Other long term liabilities 451 Total long term lease obligation $ 9,079 (1) (2) The cash outflows of the leasing activity of the Company as lessee for the six months ended June 30, 2019 were as follows: Cash Flow Source Classification Amount (Dollars in thousands) Operating cash outflows from operating leases Operating activities $ 1,957 Operating cash outflows from financing leases Operating activities 6 Financing cash outflows from financing leases Financing activities 48 In the quarter ended June 30, 2019, the Company entered into an IT infrastructure lease for approximately $0.4 million over five years. Any other leases, new or modified, for the three months ended June 30, 2019 are not material.
Schedule of maturity date of lease liabilities	The future minimum lease payments for finance and operating lease liabilities of the Company as lessee as of June 30, 2019 were as follows: Maturity Date of Lease Liabilities Operating Leases Financing Leases Total (Dollars in thousands) Year one $ 3,504 $ 192 $ 3,696 Year two 2,721 177 2,898 Year three 2,694 149 2,843 Year four 2,103 101 2,204 Year five 795 57 852 Subsequent years 1,290 — 1,290 Total lease payments 13,107 676 13,783 Less: Interest 1,518 56 1,574 Present value of lease liabilities $ 11,589 $ 620 $ 12,209
Schedule of weighted average remaining lease terms and discount rates held	The weighted average remaining lease terms and discount rates of the leases held by the Company as of June 30, 2019 were as follows: Lease Type Weighted Average Weighted Average Operating leases 4.5 5.5 Financing leases 3.9 4.3

Earnings per Share (Details)

Earnings per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Denominator:
Weighted average common shares for basic earnings per share	16,504,471	16,387,112	16,491,236	16,368,610
Effect of dilutive securities	93,025	102,559	79,877	91,126
Weighted average common shares for diluted earnings per share	16,597,496	16,489,671	16,571,113	16,459,736

Earnings per Share (Details Nar

Earnings per Share (Details Narrative) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Options to purchase stock awards	275,494	300,117	286,141	286,121

Debt (Details Narrative)

Debt (Details Narrative) - USD ($) $ in Thousands	Oct. 03, 2016	Jun. 30, 2019
Description of collateral		The Loan Agreement is secured by substantially all of the property of the Company, other than real estate.
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%
Fourth Amended and Restated Loan and Security Agreement (the 2015 Loan Agreement) [Member] | Revolving Credit Facility [Member]
Minimum amount outstanding	$ 100,000
Expiration date	Mar. 12, 2024
Additional commitment amount	$ 50,000
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%

Incentive Plans (Details Narrat

Incentive Plans (Details Narrative) - USD ($) $ in Thousands	May 07, 2019	Mar. 12, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Stock-based compensation cost			$ 400	$ 400	$ 707	$ 703
President And Chief Executive Officer [Member]
Number of shares granted under plan		52,910
Chief Financial Officer [Member] | Performance Stock Units [Member]
Number of shares granted under plan		13,228
Expiration date		Dec. 31, 2021
Term of vesting period		3 years
Non Employee Director [Member] | Restricted Stock Units (RSUs) [Member]
Number of units grants	58,920
Number of units grants, value	$ 60

Commitments and Contingencies (

Commitments and Contingencies (Details Narrative) $ in Thousands	Jun. 30, 2019USD ($)
Loan Agreement [Member] | Vendors [Member]
Outstanding line of credit	$ 1,700
Vertex Acquisition [Member]
Remaining additional liability	$ 200
Amortized over the remaining term lease	48 months

Leases (Details)

Leases (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Consolidating financing lease expense	$ 37	$ 56
Operating Expenses [Member]
Consolidated operating lease expense	982	1,968
Consolidated financing lease amortization	33	50
Net lease cost	1,019	2,024
Interest Expense [Member]
Consolidated financing lease interest	$ 4	$ 6

Leases (Details 1)

Leases (Details 1) - USD ($) $ in Thousands		Jun. 30, 2019	Dec. 31, 2018
Total ROU operating lease assets		$ 11,176
Total lease assets		11,785
Total current lease obligation		3,130
Total long term operating lease obligation		8,628
Total long term lease obligation		9,079
Operating Lease Right-Of-Use Assets, Net [Member]
Total ROU operating lease assets	[1]	11,176
Property And Equipment, Net [Member]
Total ROU financing lease assets	[2]	609
Operating Lease Liabilities [Member]
Total current operating lease obligation		2,961
Accrued And Other Current Liabilities [Member]
Total current financing lease obligation		169
Operating Lease Long Term Liabilities [Member]
Total long term operating lease obligation		8,628
Other Long Term Liabilities [Member]
Total long term financing lease obligation		$ 451
[1]	Operating lease assets are recorded net of accumulated amortization of $1.6 million as of June 30, 2019
[2]	Financing lease assets are recorded net of accumulated amortization of $0.2 million as of June 30, 2019

Leases (Details 2)

Leases (Details 2) $ in Thousands	Jun. 30, 2019USD ($)
Year one	$ 3,696
Year two	2,898
Year three	2,843
Year four	2,204
Year five	852
Subsequent years	1,290
Total lease payments	13,783
Less: Interest	1,574
Present value of lease liabilities	12,209
Operating Leases [Member]
Year one	3,504
Year two	2,721
Year three	2,694
Year four	2,103
Year five	795
Subsequent years	1,290
Total lease payments	13,107
Less: Interest	1,518
Present value of lease liabilities	11,589
Financing Leases [Member]
Year one	192
Year two	177
Year three	149
Year four	101
Year five	57
Subsequent years
Total lease payments	676
Less: Interest	56
Present value of lease liabilities	$ 620

Leases (Details 3)

Leases (Details 3)	6 Months Ended
	Jun. 30, 2019
Operating Leases [Member]
Weighted average term in years	4 years 6 months
Weighted average interest rate	5.50%
Financing Leases [Member]
Weighted average term in years	3 years 10 months 24 days
Weighted average interest rate	4.30%

Leases (Details 4)

Leases (Details 4) $ in Thousands	6 Months Ended
	Jun. 30, 2019USD ($)
Operating Activities [Member]
Operating cash outflows from operating leases	$ 1,957
Operating cash outflows from financing leases	6
Financing Activities [Member]
Financing cash outflows from financing leases	$ 48

Leases (Details Narrative)

Leases (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 02, 2019
Impacted on Retained earnings		$ 100
Operating lease assets net of accumulated amortization	$ 1,600
Financing lease assets net of accumulated amortization	200
New and Modified Lease Agreements [Member]
ROU financing lease assets	$ 400

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - Lease Agreement [Member] - Vertex's Massachusetts [Member] $ in Thousands	Jul. 22, 2019USD ($)
Subsequent Event [Line Items]
Description of lease	the Company will make a payment of approximately $2.5 million to the lessor.
Payments for rent	$ 2,800