Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 01, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 000-52046 | ||
Entity Registrant Name | HOUSTON WIRE & CABLE COMPANY | ||
Entity Central Index Key | 0001356949 | ||
Entity Tax Identification Number | 36-4151663 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 10201 North Loop East | ||
Entity Address, City or Town | Houston | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 77029 | ||
City Area Code | 713 | ||
Local Phone Number | 609-2100 | ||
Title of 12(b) Security | Common stock, par value $0.001 per share | ||
Trading Symbol | HWCC | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 31,938,992 | ||
Entity Common Stock, Shares Outstanding | 16,882,826 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 4,096,000 | |
Accounts receivable, net | ||
Trade | 38,057,000 | 50,325,000 |
Other | 3,222,000 | 6,640,000 |
Inventories, net | 68,470,000 | 114,069,000 |
Income tax receivable | 1,353,000 | |
Prepaids and other current assets | 2,086,000 | 1,833,000 |
Assets held for sale | 6,398,000 | |
Total current assets | 118,233,000 | 178,316,000 |
Property and equipment, net | 7,458,000 | 14,589,000 |
Intangible assets, net | 7,390,000 | 10,282,000 |
Goodwill | 9,849,000 | 22,353,000 |
Deferred income taxes | 3,396,000 | 600,000 |
Operating lease right-of-use assets, net | 10,879,000 | 13,481,000 |
Other assets | 507,000 | 527,000 |
Total assets | 157,712,000 | 240,148,000 |
Current liabilities: | ||
Book overdraft | 1,662,000 | |
Trade accounts payable | 5,809,000 | 13,858,000 |
Accrued and other current liabilities | 13,547,000 | 23,261,000 |
Income taxes | 1,232,000 | |
Operating lease liabilities | 2,699,000 | 2,742,000 |
Liabilities held for sale | 1,398,000 | 0 |
Total current liabilities | 26,347,000 | 39,861,000 |
Revolver debt | 22,580,000 | 83,500,000 |
Paycheck Protection Program Loan | 6,185,000 | |
Operating lease long term liabilities | 8,736,000 | 11,182,000 |
Other long-term obligations | 1,970,000 | 1,977,000 |
Total liabilities | 65,818,000 | 136,520,000 |
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: 16,870,326 and 16,556,950 shares outstanding at December 31, 2020 and 2019, respectively | 21,000 | 21,000 |
Additional paid-in capital | 48,795,000 | 52,304,000 |
Retained earnings | 96,080,000 | 108,626,000 |
Treasury stock | (53,002,000) | (57,323,000) |
Total stockholders’ equity | 91,894,000 | 103,628,000 |
Total liabilities and stockholders’ equity | $ 157,712,000 | $ 240,148,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
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, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 20,988,952 | 20,988,952 |
Common stock, outstanding | 16,870,326 | 16,556,950 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | |||
Sales | $ 286,017,000 | $ 338,286,000 | $ 356,858,000 |
Cost of sales | 222,968,000 | 258,364,000 | 271,650,000 |
Gross profit | 63,049,000 | 79,922,000 | 85,208,000 |
Operating expenses: | |||
Salaries and commissions | 33,007,000 | 37,180,000 | 38,110,000 |
Other operating expenses | 28,896,000 | 33,238,000 | 30,962,000 |
Depreciation and amortization | 3,377,000 | 2,502,000 | 2,178,000 |
Impairment charge | 373,000 | 120,000 | 60,000 |
Loss on divestiture/classification of held for sale (HFS classification) | 8,727,000 | ||
Total operating expenses | 74,380,000 | 73,040,000 | 71,310,000 |
Operating income (loss) | (11,331,000) | 6,882,000 | 13,898,000 |
Interest (expense) | (1,887,000) | (3,057,000) | (2,907,000) |
Income (loss) before income taxes | (13,218,000) | 3,825,000 | 10,991,000 |
Income tax (expense) benefit | 636,000 | (1,275,000) | (2,355,000) |
Net income (loss) | $ (12,582,000) | $ 2,550,000 | $ 8,636,000 |
Earnings (loss) per share: | |||
Basic | $ (0.76) | $ 0.16 | $ 0.53 |
Diluted | $ (0.76) | $ 0.15 | $ 0.52 |
Weighted average common shares outstanding: | |||
Basic | 16,504,141 | 16,433,644 | 16,389,876 |
Diluted | 16,504,141 | 16,552,866 | 16,523,599 |
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 |
Beginning balance, value 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) | |||
Net loss | $ 0 | 0 | 8,636 | $ 0 | 8,636 |
Repurchase of treasury shares | 0 | 0 | 0 | $ (175) | (175) |
Treasury Stock, Shares, Acquired | (25,368) | ||||
Amortization of unearned stock compensation | 0 | 1,059 | 0 | $ 0 | 1,059 |
Amortization of reclassed liability awards | 0 | 411 | 0 | 0 | 411 |
Impact of forfeited awards | 0 | 179 | 0 | $ (179) | 0 |
Impact of forfeited awards (in shares) | (13,332) | ||||
Impact of released vested restricted stock units | 0 | (353) | 0 | $ 353 | 0 |
Impact of released vested restricted stock units (in shares) | 26,185 | ||||
Issuance of restricted stock awards | 0 | (1,788) | 0 | $ 1,788 | 0 |
Issuance of restricted stock award (in shares) | 132,985 | ||||
Dividend accrual reversal | 0 | 0 | 3 | $ 0 | 3 |
Ending balance, value at Dec. 31, 2018 | $ 21 | 53,514 | 105,975 | $ (58,832) | 100,678 |
Balance at Ending (in shares) at Dec. 31, 2018 | 20,988,952 | (4,377,301) | |||
Net loss | $ 0 | 2,550 | $ 0 | 2,550 | |
Repurchase of treasury shares | 0 | 0 | 0 | $ (1,188) | (1,188) |
Treasury Stock, Shares, Acquired | (262,231) | ||||
Amortization of unearned stock compensation | 0 | 1,471 | 0 | $ 0 | 1,471 |
Impact of forfeited awards | 0 | 117 | 0 | $ (117) | 0 |
Impact of forfeited awards (in shares) | (9,142) | ||||
Impact of released vested restricted stock units | 0 | (1,019) | 0 | $ 1,019 | 0 |
Settlement of director’s deferred compensation | 0 | 0 | 0 | $ 16 | 16 |
Settlement of director's deferred compensation (in shares) | 2,251 | ||||
Impact of released vested restricted stock units (in shares) | 77,046 | ||||
Issuance of restricted stock awards | 0 | (1,779) | 0 | $ 1,779 | 0 |
Cumulative effect of accounting change (Note 7) | 0 | 0 | 101 | $ 0 | 101 |
Issuance of restricted stock award (in shares) | 137,375 | ||||
Ending balance, value at Dec. 31, 2019 | $ 21 | 52,304 | 108,626 | $ (57,323) | 103,628 |
Balance at Ending (in shares) at Dec. 31, 2019 | 20,988,952 | (4,432,002) | |||
Net loss | $ 0 | 0 | (12,582) | $ 0 | (12,582) |
Repurchase of treasury shares | 0 | 0 | 0 | $ (64) | (64) |
Treasury Stock, Shares, Acquired | (25,201) | ||||
Amortization of unearned stock compensation | 0 | 876 | 0 | $ 0 | 876 |
Impact of forfeited awards | 0 | 2,235 | 0 | $ (2,235) | 0 |
Impact of forfeited awards (in shares) | (173,131) | ||||
Impact of released vested restricted stock units | 0 | (1,055) | 0 | $ 1,055 | 0 |
Impact of released vested restricted stock units (in shares) | 81,708 | ||||
Issuance of restricted stock awards | 0 | (5,565) | 0 | $ 5,565 | 0 |
Issuance of restricted stock award (in shares) | 430,000 | ||||
Dividend accrual reversal | 0 | 0 | 36 | 36 | |
Ending balance, value at Dec. 31, 2020 | $ 21 | $ 48,795 | $ 96,080 | $ (53,002) | $ 91,894 |
Balance at Ending (in shares) at Dec. 31, 2020 | 20,988,952 | (4,118,626) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Operating activities | |||
Net income (loss) | $ (12,582,000) | $ 2,550,000 | $ 8,636,000 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Impairment charge | 373,000 | 120,000 | 60,000 |
Depreciation and amortization | 3,377,000 | 2,502,000 | 2,178,000 |
Amortization of unearned stock compensation | 876,000 | 1,471,000 | 1,298,000 |
Non-cash lease expense | 3,570,000 | 5,887,000 | |
Provision for doubtful accounts | 201,000 | 119,000 | 73,000 |
Provision for refund liability | 583,000 | 84,000 | 37,000 |
Provision for inventory obsolescence | 1,033,000 | 515,000 | 615,000 |
Loss on divestiture/HFS classification | 8,727,000 | ||
Deferred income taxes | (2,796,000) | 431,000 | (1,344,000) |
Other non-cash items | 75,000 | 54,000 | 25,000 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 13,611,000 | 2,625,000 | (2,507,000) |
Inventories | 36,301,000 | (20,259,000) | (6,825,000) |
Income taxes | 2,585,000 | (918,000) | 14,000 |
Prepaid expenses and other current assets | 50,000 | (265,000) | 1,201,000 |
Lease payments | (3,582,000) | (6,194,000) | |
Book overdraft | 1,662,000 | (3,028,000) | |
Trade accounts payable | (7,189,000) | 2,605,000 | 2,804,000 |
Accrued and other current liabilities | (9,591,000) | 2,394,000 | 2,460,000 |
Other operating activities | (408,000) | 673,000 | (359,000) |
Net cash provided by (used in) operating activities | 36,876,000 | (5,606,000) | 5,338,000 |
Investing activities | |||
Purchase of property and equipment | (1,092,000) | (2,379,000) | (1,503,000) |
Purchase of intangibles-software | (1,774,000) | ||
Proceeds from disposals of property and equipment | 24,000 | 5,000 | 20,000 |
Cash received from divestiture | 17,509,000 | ||
Net cash used in investing activities | 14,667,000 | (2,374,000) | (1,483,000) |
Financing activities | |||
Borrowings on revolver | 291,356,000 | 364,671,000 | 367,513,000 |
Payments on revolver | (352,276,000) | (352,487,000) | (369,752,000) |
Proceeds from Paycheck Protection Program loan | 6,185,000 | ||
Payment of dividends | (3,000) | (36,000) | (48,000) |
Purchase of treasury stock/stock surrendered on vested awards | (64,000) | (1,172,000) | (175,000) |
Lease payments | (837,000) | (293,000) | |
Net cash (used in) provided by financing activities | (55,639,000) | 10,683,000 | (2,462,000) |
Net change in cash | (4,096,000) | 2,703,000 | 1,393,000 |
Cash at beginning of year | 4,096,000 | 1,393,000 | |
Cash at end of year | 4,096,000 | 1,393,000 | |
Supplemental disclosures | |||
Cash paid during the year for interest | 2,017,000 | 3,011,000 | 2,811,000 |
Cash paid during the year for income taxes | $ 233,000 | $ 1,762,000 | $ 3,696,000 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [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 nineteen locations in thirteen states throughout the United States. In December 2020, the Company completed the sale of Southern Wire (“Southern”) to Southern Rigging Companies, LLC (“Southern Rigging”) for $ 17.5 million 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. Accounts Receivable Accounts receivable consists primarily of receivables from customers, less an allowance for doubtful accounts of $ 0.3 million 0.2 million 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. 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. At year end, the Company recalculates the rebates earned based on actual purchases made. Property and Equipment The Company provides for depreciation on a straight-line method over the following estimated useful lives: Buildings 25 30 Machinery and equipment 3 10 Leasehold improvements are depreciated over their estimated life or the term of the lease, whichever is shorter. Total depreciation expense was approximately $ 1.7 million 1.4 million 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, 2020, the goodwill balance was $ 9.8 million 6.3 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, in 2020, it had four reporting units for this purpose. At December 31, 2020, the Company only had three reporting units due to the sale of Southern. 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 performs a quantitative assessment and 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. See Note 4 for more details. Intangibles Intangible assets, consist of customer relationships and tradenames from the acquisition of Southwest and Southern in 2010 and the acquisition of Vertex in 2016, as well as internal-use software acquired in 2020. The Southern intangible assets were written off at December 31, 2020 in connection with the sale. The customer relationships and internal-use software are amortized over 9 and 3 year useful lives, respectively. 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. See Note 4 for more details. Leases At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether the Company has the right to direct the use of the asset. All significant lease arrangements are recognized at lease commencement. Leases with a lease term of 12 months or less at inception are not recorded on the Consolidated Balance Sheets and are expensed on a straight-line basis over the lease term in the Consolidated Statements of Operations. The Company determines the lease term by assuming the exercise of renewal options that are reasonably certain. As most of the leases do not provide an implicit interest rate, the Company uses the incremental borrowing rate which approximates to a collateralized rate at the commencement date to determine the present value of future payments that are reasonably certain. See Note 7 for more details. Self Insurance The Company retains certain self-insurance risks for health benefits. 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 a refund liability, included in accrued and other liabilities, with a corresponding reduction to sales. The Company estimates the gross profit impact of returns and allowances for previously recorded sales. This liability is calculated on historical and statistical returns and allowances data and adjusted as trends in the variables change. 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 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 have 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 operating 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 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 Company adopted this ASU in the first quarter of 2020, and the adoption did not have a material impact on the Company’s 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 Company adopted this ASU in the first quarter of 2020, and the adoption did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Pronouncements In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses.” This ASU, among other narrow-scope improvements, clarifies guidance around how to report expected recoveries. This ASU permits organizations to record expected recoveries on assets purchased with credit deterioration. In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities. The effective date and transition methodology are the same as in ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB deferred the effective dates of this ASU for smaller reporting companies (“SRC”) to fiscal years beginning after December 15, 2022. As of December 31, 2020, the Company qualifies as a SRC and expects to adopt this ASU in the first quarter of 2023. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU removes specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether certain exceptions apply in a given period. This ASU also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for: a) Franchise taxes that are partially based on income; b) Transactions with a government that result in a step up in the tax basis of goodwill; c) Separate financial statements of legal entities that are not subject to tax; and d) Enacted changes in tax laws in interim periods. For public business entities, ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The amendments in the ASU provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The provisions of the new guidance were effective upon issuance and generally can be applied through December 31, 2022 with the option to apply the guidance at any point during that time period. The Company currently has a debt agreement that references LIBOR and will apply the new guidance as this agreement is modified to reference other rates. |
Earnings (loss) per Share
Earnings (loss) per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per Share | 2. Earnings (loss) per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share include the dilutive effects of options and unvested restricted stock awards and units. The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: Year Ended December 31, 2020 2019 2018 Denominator: Weighted average common shares for basic earnings per share 16,504,141 16,433,644 16,389,876 Effect of dilutive securities — 119,222 133,723 Denominator for diluted earnings per share 16,504,141 16,552,866 16,523,599 Stock awards to purchase 843,336 369,325 298,406 |
Detail of Selected Balance Shee
Detail of Selected Balance Sheet Accounts | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Detail of Selected Balance Sheet Accounts | 3. Detail of Selected Balance Sheet Accounts Accounts Receivable The following table summarizes the changes in the allowance for doubtful accounts for the past three years: 2020 2019 2018 (In thousands) Balance at beginning of year $ 211 $ 182 $ 172 Bad debt expense 201 119 73 Write-offs, net of recoveries (113 ) (90 ) (63 ) Current year divestiture (3 ) — — Balance at end of year $ 296 $ 211 $ 182 Inventories The following table summarizes the changes in the inventory reserves for the past three years: 2020 2019 2018 (In thousands) Balance at beginning of year $ 3,584 $ 3,709 $ 3,925 Provision for inventory write-downs 1,033 515 615 Deduction for inventory write-offs (1,146 ) (640 ) (831 ) Current year divestiture/HFS classification (328 ) — — Balance at end of year $ 3,143 $ 3,584 $ 3,709 Property and Equipment, net Property and equipment are stated at cost and consist of: At December 31, 2020 2019 (In thousands) Land $ 617 $ 2,476 Buildings 3,168 8,712 Machinery and equipment (1) 17,203 19,199 20,988 30,387 Less accumulated depreciation (13,530 ) (15,798 ) Total $ 7,458 $ 14,589 (1) This includes finance leases. See Note 7 for more details. Intangible assets Intangible assets consist of: At December 31, 2020 2019 (In thousands) Tradenames $ 2,081 $ 5,816 Customer relationships 6,990 18,620 Internal-use software 1,774 — 10,845 24,436 Less accumulated amortization: Tradenames — — Customer relationships (3,301 ) (14,154 ) Internal-use software (154 ) — (3,455 ) (14,154 ) Total $ 7,390 $ 10,282 As of December 31, 2020, accumulated amortization on the remaining acquired/purchased intangible assets was $ 3.4 0.9 0.8 Future amortization expense to be recognized on the remaining acquired/purchased intangible assets is expected to be as follows: Annual Amortization Expense (In thousands) 2021 $ 1,368 2022 1,368 2023 1,213 2024 777 2025 583 Goodwill At December 31, 2020 2019 (In thousands) Balance at beginning of year $ 22,353 $ 22,353 Less current year divestiture (12,504 ) — Balance at end of year (1) $ 9,849 $ 22,353 (1) The balance is net of $ 12.6 million Accrued and Other Current Liabilities Accrued and other current liabilities consist of: At December 31, 2020 2019 (In thousands) Customer rebates $ 3,833 $ 4,979 Payroll, commissions, and bonuses 2,272 1,930 Accrued inventory purchases 997 11,122 Property taxes 1,078 977 Freight 346 464 Refund liability 1,765 1,182 Prepayments on customer orders (1) 743 2 Professional fees 446 399 Accrued interest 84 248 Lease obligations 854 593 Other 1,129 1,365 Total $ 13,547 $ 23,261 (1) This amount represents prepayments by customers for inventory. As the customer requests their inventory, the Company ships the material, reduce the prepayment and recognize the revenue. |
Impairment of Goodwill and Inta
Impairment of Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairment of Goodwill and Intangible Assets | 4. Impairment of Goodwill and Intangible Assets The Company tests goodwill and indefinite lived intangibles for impairment at least annually or more frequently whenever events or circumstances occur indicating that it might be impaired. During the first and second quarter of 2020, the Company’s market capitalization declined significantly, driven by macroeconomic and geopolitical conditions due in large part to the COVID-19 outbreak, which has contributed to a decline in demand for the Company’s products, a decline in overall financial performance, partially due to the decline in oil prices, and a deterioration of industry and market conditions. Based on these events, the Company concluded that it was more-likely-than-not that the fair values of certain of its reporting units were less than their carrying values. Therefore, the Company performed interim goodwill impairment tests in both the first and second quarter. Goodwill impairment is evaluated at each reporting unit that has goodwill; the Southern and Vertex reporting units as of December 31, 2019 and the Vertex reporting unit as of December 31, 2020. At December 31, 2019, the Company determined that the fair values of these two reporting units, as well as certain of the Company’s indefinite lived intangibles, exceeded their respective carrying values. The goodwill balance of Vertex at December 31, 2020 was $ 9.8 million During June 2020, the Company determined the fair value of its Vertex reporting unit’s tradenames was below its carrying value, and as a result recorded an impairment charge of $ 0.1 million 0.1 million 0.2 million As part of the divestiture of the Southern reporting unit, the Company wrote-off its $ 12.5 million 1.0 A qualitative assessment was performed as of October 1, 2019 for the Southern, Southwest and Vertex reporting units. The results of the test indicated that it was more-likely-than-not that the fair value of the reporting units exceeded their respective carrying values except for certain of the tradenames of the Southwest reporting unit for which a quantitative test was necessary and an impairment charge of $ 0.1 million The Company is still anticipating growth in the business acquired in Vertex reporting unit. 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, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 5. Debt On March 12, 2019 and December 10, 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 the Second and Third Amendments, respectively, to the Fourth Amended and Restated Loan and Security Agreement (such agreement, as so amended, the “Loan Agreement”). The Second Amendment extended the expiration date until March 12, 2024 and the Third Amendment increased the revolving credit facility to $ 115 million 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 Availability under the Loan Agreement is limited to a borrowing base equal to 85 70 90 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 December 31, 2020, the Company was in compliance with the availability-based covenant governing its indebtedness. The Company’s borrowings at December 31, 2020 and 2019 were $ 28.8 million 83.5 million 1.9 3.4 At December 31, 2020, the Company had available borrowing capacity of $ 47.5 million 0.1 million 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.” On May 4, 2020, the Company received a $ 6.2 million Principal repayment obligations for succeeding fiscal years are as follows: (In thousands) 2021 $ — 2022 (1) 6,185 2023 — 2024 22,580 Total $ 28,765 (1) The Company has applied for loan forgiveness and believes that it will achieve 90-95% forgiveness, or approximately $ 5.6 5.9 million |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 6. Income Taxes The provision (benefit) for income taxes consists of: Year Ended December 31, 2020 2019 2018 (In thousands) Current: Federal $ 1,814 $ 719 $ 3,041 State 346 125 658 Total current 2,160 844 3,699 Deferred: Federal (2,592 ) 400 (1,246 ) State (204 ) 31 (98 ) Total deferred (2,796 ) 431 (1,344 ) Total $ (636 ) $ 1,275 $ 2,355 A reconciliation of the U.S. Federal statutory tax rate to the effective tax rate on income before taxes is as follows: Year Ended December 31, 2020 2019 2018 Federal statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit (1.1 ) 3.4 4.3 Impairment, non-deductible portion — — 0.1 Share-based compensation (1.5 ) 3.7 1.2 Non-deductible items (0.3 ) 5.4 2.1 Valuation allowance — — (9.5 ) Current year divestiture (13.9 ) — — Other 0.6 (0.2 ) 2.2 Total effective tax rate 4.8 % 33.3 % 21.4 % Significant components of the Company’s deferred taxes were as follows: Year Ended December 31, 2020 2019 (In thousands) Deferred tax assets: Operating lease right-of-use assets $ 3,203 $ 3,425 Inventory reserve 856 1,072 Uniform capitalization adjustment 1,523 1,633 Stock compensation expense 501 666 Accrued commission 144 124 Held for sale 1,577 — Property and equipment, net 233 — Refund liability 406 — Other 224 199 Total deferred tax assets 8,667 7,119 Deferred tax liabilities Operating lease right-of-use assets (3,075 ) (3,316 ) Goodwill (232 ) (838 ) Intangible assets (1,555 ) (2,230 ) Other (409 ) (135 ) Total deferred tax liabilities (5,271 ) (6,519 ) Net deferred tax assets $ 3,396 $ 600 The Company does not have any unrecognized tax benefits recorded at December 2020, 2019 and 2018. 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, 2020 and 2019, the Company recorded no provision for interest or penalties related to uncertain tax positions. The tax years 2016 through 2020 remain open to examination by the major taxing jurisdictions to which the Company is subject. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
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 The Company leases property including warehouse space, offices, vehicles and 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. Lease Type Statement of Operations Classification 2020 2019 (In thousands) Consolidated operating lease expense Operating expenses $ 3,570 $ 5,887 Consolidated financing lease amortization Depreciation and amortization 835 305 Consolidated financing lease interest Interest expense 141 61 Consolidating financing lease expense 976 366 Net lease cost $ 4,546 $ 6,253 Rent expense was approximately $ 3.7 million The value of the net assets and liabilities generated by the leasing activity of the Company as lessee as of December 31, 2020 and December 31, 2019 were as follows: Lease Type Balance Sheet Classification 2020 2019 (In thousands) Total ROU operating lease assets (1) Operating lease right-of-use assets, net $ 10,879 $ 13,481 Total ROU financing lease assets (2) Property and equipment, net 2,793 2,430 Total lease assets $ 13,672 $ 15,911 Total current operating lease obligation Operating lease liabilities $ 2,699 $ 2,742 Total current financing lease obligation Accrued and other current liabilities 856 593 Total current lease obligation $ 3,555 $ 3,335 Total long term operating lease obligation Operating lease long term liabilities $ 8,736 $ 11,182 Total long term financing lease obligation Other long term liabilities 1,958 1,860 Total long term lease obligation $ 10,694 $ 13,042 (1) Operating lease assets are recorded net of accumulated amortization of $ 4.3 million 2.3 million (2) Financing lease assets are recorded net of accumulated amortization of $ 1.2 million 0.4 million The future minimum lease payments for finance and operating lease liabilities of the Company as lessee as of December 31, 2020 were as follows: Maturity Date of Lease Liabilities Operating Leases Financing Leases Total (In thousands) Year one $ 3,222 $ 968 $ 4,190 Year two 3,186 887 4,073 Year three 2,654 753 3,407 Year four 2,330 406 2,736 Year five 1,076 31 1,107 Subsequent years 266 — 266 Total lease payments 12,734 3,045 15,779 Less: Interest (1,299 ) (231 ) (1,530 ) Present value of lease liabilities $ 11,435 $ 2,814 $ 14,249 The weighted average remaining lease terms and discount rates of the leases held by the Company as of December 31, 2020 and 2019 were as follows Lease Type Weighted Average Term in Years Weighted Average Interest Rate 2020 2019 2020 2019 Operating leases 4.2 4.9 5.3 5.3 Financing leases 3.4 4.2 4.7 5.3 The cash outflows of the leasing activity of the Company as lessee for the twelve months ended December 31, 2020 and 2019 were as follows: Cash Flow Source Classification 2020 2019 (In thousands) Operating cash outflows from operating leases Operating activities $ 3,442 $ 6,140 Operating cash outflows from financing leases Operating activities 140 54 Financing cash outflows from financing leases Financing activities 837 293 During the years ended December 31, 2020 and 2019, the Company recorded non-cash ROU financing lease assets and corresponding financing lease obligations totaling $ 1.2 million 2.5 million Also during the year ended December 31, 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 recognized expense related to the early termination of approximately $ 2.2 million |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Stockholders’ Equity | 8. 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 235,500 1.1 million Under the terms of the 2017 Stock Plan, the Company acquired 25,201 26,731 The Company paid a quarterly cash dividend from August 2007 until August 2016. The Company has not paid a cash dividend since 2016. The Company is authorized to issue 5,000,000 100,000 |
Retirement-related Benefits
Retirement-related Benefits | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Retirement-related Benefits | 9. 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. From January 1, 2018 through April 30, 2020, the Company matched 100 1 0.1 million 0.2 million 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. Effective November 30, 2019, there are no active employees in the plan as the plan was frozen with the closure of Vertex’s Massachusetts facility. The benefit provisions to participants of the defined benefit plan were 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 The current projected benefit obligation was $ 0.8 million 1.3 million 2.0 3.2 The fair value of the assets of the defined benefit plan was $ 0.8 million 1.3 million 2019, respectively. The plan assets are all classified as Level 1 and as such have readily observable prices and therefore a reliable fair market value. |
Incentive Plans
Incentive Plans | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Incentive Plans | 10. Incentive Plans The Houston Wire & Cable Company 2017 Stock Plan (the “2017 Plan”) as amended in 2019, 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 2,500,000 The 2017 Plan succeeded the Company’s 2006 Stock Plan (the “2006 Plan”), which expired on May 1, 2017 Stock Option Awards The Company may grant options to purchase its common stock to employees and directors of the Company under the 2006 Plan and 2017 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 five years one year 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 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: Schedule of stock option activity Options Weighted Aggregate Weighted 2020 2019 2020 2019 2020 2019 2020 2019 Outstanding-Beginning of year 122 154 13.72 13.40 $ — $ — 1.75 2.52 Granted — — — Exercised — — — Forfeited (13 ) (22 ) 13.23 13.04 Expired (19 ) (10 ) 12.14 10.32 Outstanding-End of year 90 122 14.11 13.72 $ — $ — 0.97 1.75 Exercisable-End of year 90 122 14.11 13.72 $ — $ — 0.97 1.75 There was no There were no no The total grant-date fair value of options vested during 2020 and 2019 was $ 0 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 0.1 million 1 5 years On November 3, 2020, the Board of Directors granted to the Company’s newly appointed Chief Financial Officer 55,000 On June 26, 2020, the Board of Directors granted 10,000 On December 3, 2019, the Board of Directors granted to the Company’s President and Chief Executive Officer 78,125 19,531 Also, on December 3, 2019, the Board of Directors granted 250,000 125,000 The Board of Directors also granted 39,719 Following the Annual Meeting of Stockholders on May 7, 2019, the Company granted restricted stock units with a grant date value of $ 60,000 58,920 On March 12, 2019, the Board of Directors granted 52,910 13,228 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 years ended December 31, 2020 and 2019: Schedule of restricted stock activity Shares 2020 2019 Shares Weighted Shares Weighted Non-vested -Beginning of year 654 $ 5.18 259 $ 6.78 Granted 55 2.86 511 3.84 Vested (95 ) 5.59 (107 ) 7.24 Cancelled/Forfeited (173 ) 5.33 (9 ) 6.34 Expired — — — — Non-vested -End of year 441 $ 4.26 654 5.18 Units 2020 2019 Shares Weighted Shares Weighted Non-vested -Beginning of year 277 $ 6.83 215 $ 7.59 Granted 10 2.19 125 5.88 Vested (137 ) 6.94 (60 ) 7.59 Cancelled/Forfeited (18 ) 6.18 (3 ) 7.65 Expired — — — — Non-vested -End of year 132 6.44 277 6.83 Total stock-based compensation cost was $ 0.9 million 1.5 million 1.3 million 0.2 million As of December 31, 2020, there was $ 0.8 million 17 months 1,631,123 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies The Company had aggregate purchase commitments for fixed inventory quantities of approximately $ 32.0 million The Company had outstanding under the Loan Agreement letters of credit totaling $ 0.7 million From time to time, we are involved in lawsuits that are brought against us in the normal course of business. We are not currently a party to any legal proceedings that we expect, either individually or in the aggregate, to have a material adverse effect on the Company’s consolidated financial position, cash flows, or results from operations. |
Select Quarterly Financial Data
Select Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Select Quarterly Financial Data (unaudited) | 12. Select Quarterly Financial Data (unaudited) The following table presents the Company’s unaudited quarterly results of operations for each of the last eight quarters in the period ended December 31, 2020. The unaudited information has been prepared on the same basis as the audited consolidated financial statements. Schedule of unaudited quarterly results of operations Year Ended December 31, 2020 Fourth Quarter Third Quarter Second Quarter First Quarter (in thousands, except per share data) Sales $ 65,460 $ 70,247 $ 66,777 $ 83,533 Gross profit $ 14,231 $ 14,990 $ 14,236 $ 19,592 Operating (loss) income $ (10,210 ) 1 $ (519 ) $ (2,188 ) $ 1,586 Net (loss) income $ (10,229 ) 1 $ (735 ) $ (2,163 ) $ 545 Earnings (loss) per share: Basic $ (0.61 ) 1 $ (0.04 ) $ (0.13 ) $ 0.03 Diluted $ (0.61 ) 1 $ (0.04 ) $ (0.13 ) $ 0.03 Year Ended December 31, 2019 Fourth Quarter Third Quarter Second Quarter First Quarter (in thousands, except per share data) Sales $ 82,287 $ 85,403 $ 85,326 $ 85,270 Gross profit $ 18,695 $ 19,431 $ 20,537 $ 21,259 Operating income $ 76 $ (87) $ 3,030 $ 3,863 Net income $ (656 ) $ (721) $ 1,643 $ 2,284 Earnings per share: Basic $ (0.04 ) $ (0.04) $ 0.10 $ 0.14 Diluted $ (0.04 ) $ (0.04) $ 0.10 $ 0.14 (1) This includes the loss on divestitures/HFS classification of $ 8,727 |
Divestitures
Divestitures | 12 Months Ended |
Dec. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | 13. Divestitures Divestiture of Southern and Southwest reporting units On December 2, 2020, the Company entered into an asset purchase agreement to dispose of our Southern reporting unit. Upon the closing of this transaction on December 31, 2020, the Company received $ 17.5 million 1.5 million 1.0 million 2.0 million 0.3 million 15.4 million In addition, in January 2021 the Company entered into an asset purchase agreement to sell the Southwest reporting unit, other than accounts receivable. Upon the closing of this transaction, the Company will receive approximately $ 5.0 million 6.7 million 0.1 million The following is a summary of net assets and net liabilities related to Southwest as of December 31, 2020, that were classified as held for sale: Schedule of net assets and net liabilities classified as held for sale Inventory $ 5,145 Prepaid expenses 38 PP&E 6,877 Intangibles 1,020 Other assets 29 Total assets 13,109 Less: Loss on classification to held for sale (6,711 ) Assets classified as held for sale $ 6,398 Accounts payable $ 969 Accrued liabilities 394 Long term lease liabilities 35 Liabilities classified as held for sale $ 1,398 The Company evaluated the divestitures of the Southern and Southwest reporting units individually and in the aggregate and determined that they did not represent a strategic shift that had a major effect on the Company’s operations or financial results and did not qualify as a significant component of the Company. As a result, the divestitures were not reported as discontinued operations. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events Completion of Sale of Southwest On March 12, 2021, the Company completed the sale of substantially all of the assets, other than accounts receivable of approximately $ 2.9 million 3.4 million 0.8 million Agreement and Plan of Merger On March 25, 2021, the Company announced that it entered into an Agreement and Plan of Merger with Omni Cable, LLC (“OmniCable”) and a subsidiary of OmniCable pursuant to which, subject to the satisfaction of customary closing conditions, the subsidiary will be merged with and into the Company, and the Company will become a wholly-owned subsidiary of OmniCable. Under the terms of the merger agreement, at the effective time of the merger each share of the Company’s common stock will be converted into the right to receive $ 5.30 300,461 The merger is subject to the satisfaction or waiver of certain closing conditions, including, among other things: (1) the adoption of the merger agreement by the holders of a majority of the outstanding shares of Company common stock; (2) the absence of certain legal impediments preventing the completion of the merger; (3) the accuracy of the representations and warranties of the parties and the compliance of the parties with their respective covenants, subject to customary qualifications, including with respect to materiality; and (4) conditions relating to the Company’s tangible net book value and indebtedness. The Company expects the merger to be completed in the second quarter of 2021. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [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 nineteen locations in thirteen states throughout the United States. In December 2020, the Company completed the sale of Southern Wire (“Southern”) to Southern Rigging Companies, LLC (“Southern Rigging”) for $ 17.5 million |
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. |
Accounts Receivable | Accounts Receivable Accounts receivable consists primarily of receivables from customers, less an allowance for doubtful accounts of $ 0.3 million 0.2 million |
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. |
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. At year end, the Company recalculates the rebates earned based on actual purchases made. |
Property and Equipment | Property and Equipment The Company provides for depreciation on a straight-line method over the following estimated useful lives: Buildings 25 30 Machinery and equipment 3 10 Leasehold improvements are depreciated over their estimated life or the term of the lease, whichever is shorter. Total depreciation expense was approximately $ 1.7 million 1.4 million |
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, 2020, the goodwill balance was $ 9.8 million 6.3 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, in 2020, it had four reporting units for this purpose. At December 31, 2020, the Company only had three reporting units due to the sale of Southern. 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 performs a quantitative assessment and 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. See Note 4 for more details. |
Intangibles | Intangibles Intangible assets, consist of customer relationships and tradenames from the acquisition of Southwest and Southern in 2010 and the acquisition of Vertex in 2016, as well as internal-use software acquired in 2020. The Southern intangible assets were written off at December 31, 2020 in connection with the sale. The customer relationships and internal-use software are amortized over 9 and 3 year useful lives, respectively. 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. See Note 4 for more details. |
Leases | Leases At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether the Company has the right to direct the use of the asset. All significant lease arrangements are recognized at lease commencement. Leases with a lease term of 12 months or less at inception are not recorded on the Consolidated Balance Sheets and are expensed on a straight-line basis over the lease term in the Consolidated Statements of Operations. The Company determines the lease term by assuming the exercise of renewal options that are reasonably certain. As most of the leases do not provide an implicit interest rate, the Company uses the incremental borrowing rate which approximates to a collateralized rate at the commencement date to determine the present value of future payments that are reasonably certain. See Note 7 for more details. |
Self Insurance | Self Insurance The Company retains certain self-insurance risks for health benefits. 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 a refund liability, included in accrued and other liabilities, with a corresponding reduction to sales. The Company estimates the gross profit impact of returns and allowances for previously recorded sales. This liability is calculated on historical and statistical returns and allowances data and adjusted as trends in the variables change. 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 |
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 have 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 operating 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 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 Company adopted this ASU in the first quarter of 2020, and the adoption did not have a material impact on the Company’s 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 Company adopted this ASU in the first quarter of 2020, and the adoption did not have a material impact on the Company’s consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses.” This ASU, among other narrow-scope improvements, clarifies guidance around how to report expected recoveries. This ASU permits organizations to record expected recoveries on assets purchased with credit deterioration. In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities. The effective date and transition methodology are the same as in ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB deferred the effective dates of this ASU for smaller reporting companies (“SRC”) to fiscal years beginning after December 15, 2022. As of December 31, 2020, the Company qualifies as a SRC and expects to adopt this ASU in the first quarter of 2023. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU removes specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether certain exceptions apply in a given period. This ASU also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for: a) Franchise taxes that are partially based on income; b) Transactions with a government that result in a step up in the tax basis of goodwill; c) Separate financial statements of legal entities that are not subject to tax; and d) Enacted changes in tax laws in interim periods. For public business entities, ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently assessing the impact of this ASU on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The amendments in the ASU provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The provisions of the new guidance were effective upon issuance and generally can be applied through December 31, 2022 with the option to apply the guidance at any point during that time period. The Company currently has a debt agreement that references LIBOR and will apply the new guidance as this agreement is modified to reference other rates. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
The Company provides for depreciation on a straight-line method over the following estimated useful lives: | The Company provides for depreciation on a straight-line method over the following estimated useful lives: Buildings 25 30 Machinery and equipment 3 10 |
Earnings (loss) per Share (Tabl
Earnings (loss) per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: | The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: Year Ended December 31, 2020 2019 2018 Denominator: Weighted average common shares for basic earnings per share 16,504,141 16,433,644 16,389,876 Effect of dilutive securities — 119,222 133,723 Denominator for diluted earnings per share 16,504,141 16,552,866 16,523,599 |
Detail of Selected Balance Sh_2
Detail of Selected Balance Sheet Accounts (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The following table summarizes the changes in the allowance for doubtful accounts for the past three years: | The following table summarizes the changes in the allowance for doubtful accounts for the past three years: 2020 2019 2018 (In thousands) Balance at beginning of year $ 211 $ 182 $ 172 Bad debt expense 201 119 73 Write-offs, net of recoveries (113 ) (90 ) (63 ) Current year divestiture (3 ) — — Balance at end of year $ 296 $ 211 $ 182 |
The following table summarizes the changes in the inventory reserves for the past three years: | The following table summarizes the changes in the inventory reserves for the past three years: 2020 2019 2018 (In thousands) Balance at beginning of year $ 3,584 $ 3,709 $ 3,925 Provision for inventory write-downs 1,033 515 615 Deduction for inventory write-offs (1,146 ) (640 ) (831 ) Current year divestiture/HFS classification (328 ) — — Balance at end of year $ 3,143 $ 3,584 $ 3,709 |
Property and equipment are stated at cost and consist of: | Property and equipment are stated at cost and consist of: At December 31, 2020 2019 (In thousands) Land $ 617 $ 2,476 Buildings 3,168 8,712 Machinery and equipment (1) 17,203 19,199 20,988 30,387 Less accumulated depreciation (13,530 ) (15,798 ) Total $ 7,458 $ 14,589 (1) This includes finance leases. See Note 7 for more details. |
Intangible assets consist of: | Intangible assets consist of: At December 31, 2020 2019 (In thousands) Tradenames $ 2,081 $ 5,816 Customer relationships 6,990 18,620 Internal-use software 1,774 — 10,845 24,436 Less accumulated amortization: Tradenames — — Customer relationships (3,301 ) (14,154 ) Internal-use software (154 ) — (3,455 ) (14,154 ) Total $ 7,390 $ 10,282 |
Future amortization expense to be recognized on the remaining acquired/purchased intangible assets is expected to be as follows: | As of December 31, 2020, accumulated amortization on the remaining acquired/purchased intangible assets was $ 3.4 0.9 0.8 Future amortization expense to be recognized on the remaining acquired/purchased intangible assets is expected to be as follows: Annual Amortization Expense (In thousands) 2021 $ 1,368 2022 1,368 2023 1,213 2024 777 2025 583 |
Goodwill | Goodwill At December 31, 2020 2019 (In thousands) Balance at beginning of year $ 22,353 $ 22,353 Less current year divestiture (12,504 ) — Balance at end of year (1) $ 9,849 $ 22,353 (1) The balance is net of $ 12.6 million |
Accrued and other current liabilities consist of: | Accrued and Other Current Liabilities Accrued and other current liabilities consist of: At December 31, 2020 2019 (In thousands) Customer rebates $ 3,833 $ 4,979 Payroll, commissions, and bonuses 2,272 1,930 Accrued inventory purchases 997 11,122 Property taxes 1,078 977 Freight 346 464 Refund liability 1,765 1,182 Prepayments on customer orders (1) 743 2 Professional fees 446 399 Accrued interest 84 248 Lease obligations 854 593 Other 1,129 1,365 Total $ 13,547 $ 23,261 (1) This amount represents prepayments by customers for inventory. As the customer requests their inventory, the Company ships the material, reduce the prepayment and recognize the revenue. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Principal repayment obligations for succeeding fiscal years are as follows: | Principal repayment obligations for succeeding fiscal years are as follows: (In thousands) 2021 $ — 2022 (1) 6,185 2023 — 2024 22,580 Total $ 28,765 (1) The Company has applied for loan forgiveness and believes that it will achieve 90-95% forgiveness, or approximately $ 5.6 5.9 million |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
The provision (benefit) for income taxes consists of: | The provision (benefit) for income taxes consists of: Year Ended December 31, 2020 2019 2018 (In thousands) Current: Federal $ 1,814 $ 719 $ 3,041 State 346 125 658 Total current 2,160 844 3,699 Deferred: Federal (2,592 ) 400 (1,246 ) State (204 ) 31 (98 ) Total deferred (2,796 ) 431 (1,344 ) Total $ (636 ) $ 1,275 $ 2,355 |
A reconciliation of the U.S. Federal statutory tax rate to the effective tax rate on income before taxes is as follows: | A reconciliation of the U.S. Federal statutory tax rate to the effective tax rate on income before taxes is as follows: Year Ended December 31, 2020 2019 2018 Federal statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit (1.1 ) 3.4 4.3 Impairment, non-deductible portion — — 0.1 Share-based compensation (1.5 ) 3.7 1.2 Non-deductible items (0.3 ) 5.4 2.1 Valuation allowance — — (9.5 ) Current year divestiture (13.9 ) — — Other 0.6 (0.2 ) 2.2 Total effective tax rate 4.8 % 33.3 % 21.4 % |
Significant components of the Company’s deferred taxes were as follows: | Significant components of the Company’s deferred taxes were as follows: Year Ended December 31, 2020 2019 (In thousands) Deferred tax assets: Operating lease right-of-use assets $ 3,203 $ 3,425 Inventory reserve 856 1,072 Uniform capitalization adjustment 1,523 1,633 Stock compensation expense 501 666 Accrued commission 144 124 Held for sale 1,577 — Property and equipment, net 233 — Refund liability 406 — Other 224 199 Total deferred tax assets 8,667 7,119 Deferred tax liabilities Operating lease right-of-use assets (3,075 ) (3,316 ) Goodwill (232 ) (838 ) Intangible assets (1,555 ) (2,230 ) Other (409 ) (135 ) Total deferred tax liabilities (5,271 ) (6,519 ) Net deferred tax assets $ 3,396 $ 600 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Leases (Details 1) | Lease Type Statement of Operations Classification 2020 2019 (In thousands) Consolidated operating lease expense Operating expenses $ 3,570 $ 5,887 Consolidated financing lease amortization Depreciation and amortization 835 305 Consolidated financing lease interest Interest expense 141 61 Consolidating financing lease expense 976 366 Net lease cost $ 4,546 $ 6,253 |
The value of the net assets and liabilities generated by the leasing activity of the Company as lessee as of December 31, 2020 and December 31, 2019 were as follows: | The value of the net assets and liabilities generated by the leasing activity of the Company as lessee as of December 31, 2020 and December 31, 2019 were as follows: Lease Type Balance Sheet Classification 2020 2019 (In thousands) Total ROU operating lease assets (1) Operating lease right-of-use assets, net $ 10,879 $ 13,481 Total ROU financing lease assets (2) Property and equipment, net 2,793 2,430 Total lease assets $ 13,672 $ 15,911 Total current operating lease obligation Operating lease liabilities $ 2,699 $ 2,742 Total current financing lease obligation Accrued and other current liabilities 856 593 Total current lease obligation $ 3,555 $ 3,335 Total long term operating lease obligation Operating lease long term liabilities $ 8,736 $ 11,182 Total long term financing lease obligation Other long term liabilities 1,958 1,860 Total long term lease obligation $ 10,694 $ 13,042 (1) Operating lease assets are recorded net of accumulated amortization of $ 4.3 million 2.3 million (2) Financing lease assets are recorded net of accumulated amortization of $ 1.2 million 0.4 million |
The future minimum lease payments for finance and operating lease liabilities of the Company as lessee as of December 31, 2020 were as follows: | The future minimum lease payments for finance and operating lease liabilities of the Company as lessee as of December 31, 2020 were as follows: Maturity Date of Lease Liabilities Operating Leases Financing Leases Total (In thousands) Year one $ 3,222 $ 968 $ 4,190 Year two 3,186 887 4,073 Year three 2,654 753 3,407 Year four 2,330 406 2,736 Year five 1,076 31 1,107 Subsequent years 266 — 266 Total lease payments 12,734 3,045 15,779 Less: Interest (1,299 ) (231 ) (1,530 ) Present value of lease liabilities $ 11,435 $ 2,814 $ 14,249 |
The weighted average remaining lease terms and discount rates of the leases held by the Company as of December 31, 2020 and 2019 were as follows | The weighted average remaining lease terms and discount rates of the leases held by the Company as of December 31, 2020 and 2019 were as follows Lease Type Weighted Average Term in Years Weighted Average Interest Rate 2020 2019 2020 2019 Operating leases 4.2 4.9 5.3 5.3 Financing leases 3.4 4.2 4.7 5.3 |
The cash outflows of the leasing activity of the Company as lessee for the twelve months ended December 31, 2020 and 2019 were as follows: | The cash outflows of the leasing activity of the Company as lessee for the twelve months ended December 31, 2020 and 2019 were as follows: Cash Flow Source Classification 2020 2019 (In thousands) Operating cash outflows from operating leases Operating activities $ 3,442 $ 6,140 Operating cash outflows from financing leases Operating activities 140 54 Financing cash outflows from financing leases Financing activities 837 293 |
Incentive Plans (Tables)
Incentive Plans (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [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: Schedule of stock option activity Options Weighted Aggregate Weighted 2020 2019 2020 2019 2020 2019 2020 2019 Outstanding-Beginning of year 122 154 13.72 13.40 $ — $ — 1.75 2.52 Granted — — — Exercised — — — Forfeited (13 ) (22 ) 13.23 13.04 Expired (19 ) (10 ) 12.14 10.32 Outstanding-End of year 90 122 14.11 13.72 $ — $ — 0.97 1.75 Exercisable-End of year 90 122 14.11 13.72 $ — $ — 0.97 1.75 |
Schedule of restricted stock activity | The following summarizes restricted stock activity for the years ended December 31, 2020 and 2019: Schedule of restricted stock activity Shares 2020 2019 Shares Weighted Shares Weighted Non-vested -Beginning of year 654 $ 5.18 259 $ 6.78 Granted 55 2.86 511 3.84 Vested (95 ) 5.59 (107 ) 7.24 Cancelled/Forfeited (173 ) 5.33 (9 ) 6.34 Expired — — — — Non-vested -End of year 441 $ 4.26 654 5.18 Units 2020 2019 Shares Weighted Shares Weighted Non-vested -Beginning of year 277 $ 6.83 215 $ 7.59 Granted 10 2.19 125 5.88 Vested (137 ) 6.94 (60 ) 7.59 Cancelled/Forfeited (18 ) 6.18 (3 ) 7.65 Expired — — — — Non-vested -End of year 132 6.44 277 6.83 |
Select Quarterly Financial Da_2
Select Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020. The unaudited information has been prepared on the same basis as the audited consolidated financial statements. Schedule of unaudited quarterly results of operations Year Ended December 31, 2020 Fourth Quarter Third Quarter Second Quarter First Quarter (in thousands, except per share data) Sales $ 65,460 $ 70,247 $ 66,777 $ 83,533 Gross profit $ 14,231 $ 14,990 $ 14,236 $ 19,592 Operating (loss) income $ (10,210 ) 1 $ (519 ) $ (2,188 ) $ 1,586 Net (loss) income $ (10,229 ) 1 $ (735 ) $ (2,163 ) $ 545 Earnings (loss) per share: Basic $ (0.61 ) 1 $ (0.04 ) $ (0.13 ) $ 0.03 Diluted $ (0.61 ) 1 $ (0.04 ) $ (0.13 ) $ 0.03 Year Ended December 31, 2019 Fourth Quarter Third Quarter Second Quarter First Quarter (in thousands, except per share data) Sales $ 82,287 $ 85,403 $ 85,326 $ 85,270 Gross profit $ 18,695 $ 19,431 $ 20,537 $ 21,259 Operating income $ 76 $ (87) $ 3,030 $ 3,863 Net income $ (656 ) $ (721) $ 1,643 $ 2,284 Earnings per share: Basic $ (0.04 ) $ (0.04) $ 0.10 $ 0.14 Diluted $ (0.04 ) $ (0.04) $ 0.10 $ 0.14 (1) This includes the loss on divestitures/HFS classification of $ 8,727 |
Divestitures (Tables)
Divestitures (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of net assets and net liabilities classified as held for sale | The following is a summary of net assets and net liabilities related to Southwest as of December 31, 2020, that were classified as held for sale: Schedule of net assets and net liabilities classified as held for sale Inventory $ 5,145 Prepaid expenses 38 PP&E 6,877 Intangibles 1,020 Other assets 29 Total assets 13,109 Less: Loss on classification to held for sale (6,711 ) Assets classified as held for sale $ 6,398 Accounts payable $ 969 Accrued liabilities 394 Long term lease liabilities 35 Liabilities classified as held for sale $ 1,398 The Company evaluated the divestitures of the Southern and Southwest reporting units individually and in the aggregate and determined that they did not represent a strategic shift that had a major effect on the Company’s operations or financial results and did not qualify as a significant component of the Company. As a result, the divestitures were not reported as discontinued operations. |
The Company provides for deprec
The Company provides for depreciation on a straight-line method over the following estimated useful lives: (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Building [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 25 years |
Building [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 30 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | |||
Working capital adjustment | $ 17,500,000 | ||
Reserve for returns and allowances | 300,000 | $ 200,000 | |
Depreciation expense | 1,700,000 | 1,700,000 | $ 1,400,000 |
Goodwill | $ 9,849,000 | $ 22,353,000 | |
Percentage of goodwill | 6.30% | ||
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 |
The following reconciles the de
The following reconciles the denominator used in the calculation of diluted earnings (loss) per share: (Details) - shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |||
Weighted average common shares for basic earnings per share | 16,504,141 | 16,433,644 | 16,389,876 |
Effect of dilutive securities | 119,222 | 133,723 | |
Denominator for diluted earnings per share | 16,504,141 | 16,552,866 | 16,523,599 |
Earnings (loss) per Share (Deta
Earnings (loss) per Share (Details Narrative) - shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |||
Options to purchase common stock | 843,336 | 369,325 | 298,406 |
The following table summarizes
The following table summarizes the changes in the allowance for doubtful accounts for the past three years: (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Balance at beginning of year | $ 211 | $ 182 | $ 172 |
Bad debt expense | 201 | 119 | 73 |
Write-offs, net of recoveries | (113) | (90) | (63) |
Current year divestiture | (3) | ||
Balance at end of year | $ 296 | $ 211 | $ 182 |
The following table summarize_2
The following table summarizes the changes in the inventory reserves for the past three years: (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Balance at beginning of year | $ 3,584 | $ 3,709 | $ 3,925 |
Provision for inventory write-downs | 1,033 | 515 | 615 |
Deduction for inventory write-offs | (1,146) | (640) | (831) |
Current year divestiture/HFS classification | (328) | ||
Balance at end of year | $ 3,143 | $ 3,584 | $ 3,709 |
Property and equipment are stat
Property and equipment are stated at cost and consist of: (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | |
Lessor, Lease, Description [Line Items] | |||
Gross | $ 20,988 | $ 30,387 | |
Less accumulated depreciation | (13,530) | (15,798) | |
Total | 7,458 | 14,589 | |
Land [Member] | |||
Lessor, Lease, Description [Line Items] | |||
Gross | 617 | 2,476 | |
Building [Member] | |||
Lessor, Lease, Description [Line Items] | |||
Gross | 3,168 | 8,712 | |
Machinery and Equipment [Member] | |||
Lessor, Lease, Description [Line Items] | |||
Gross | [1] | $ 17,203 | $ 19,199 |
[1] | This includes finance leases. See Note 7 for more details. |
Intangible assets consist of_ (
Intangible assets consist of: (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Finite lived intangible assets, gross | $ 10,845 | $ 24,436 |
Finite-Lived Intangible Assets, Accumulated Amortization | (3,455) | (14,154) |
Total | 7,390 | 10,282 |
Trade Names [Member] | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Finite lived intangible assets, gross | 2,081 | 5,816 |
Customer Relationships [Member] | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Finite lived intangible assets, gross | 6,990 | 18,620 |
Finite-Lived Intangible Assets, Accumulated Amortization | (3,301) | $ (14,154) |
Internal Use Software [Member] | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Finite lived intangible assets, gross | 1,774 | |
Finite-Lived Intangible Assets, Accumulated Amortization | $ (154) |
Future amortization expense to
Future amortization expense to be recognized on the remaining acquired/purchased intangible assets is expected to be as follows: (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
2021 | $ 1,368 |
2022 | 1,368 |
2023 | 1,213 |
2024 | 777 |
2025 | $ 583 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Balance at beginning of year | $ 22,353 | [1] | $ 22,353 | |
Less current year divestiture | (12,504) | |||
Balance at end of year | [1] | $ 9,849 | $ 22,353 | |
[1] | The balance is net of $ 12.6 million |
Accrued and other current liabi
Accrued and other current liabilities consist of: (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Customer rebates | $ 3,833 | $ 4,979 | |
Payroll, commissions, and bonuses | 2,272 | 1,930 | |
Accrued inventory purchases | 997 | 11,122 | |
Property taxes | 1,078 | 977 | |
Freight | 346 | 464 | |
Refund liability | 1,765 | 1,182 | |
Prepayments on customer orders | [1] | 743 | 2 |
Professional fees | 446 | 399 | |
Accrued interest | 84 | 248 | |
Lease obligations | 854 | 593 | |
Other | 1,129 | 1,365 | |
Total | $ 13,547 | $ 23,261 | |
[1] | This amount represents prepayments by customers for inventory. As the customer requests their inventory, the Company ships the material, reduce the prepayment and recognize the revenue. |
Impairment of Goodwill and In_2
Impairment of Goodwill and Intangible Assets (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Entity Listings [Line Items] | ||||
Goodwill, Impaired, Accumulated Impairment Loss | $ 12,600,000,000 | |||
Goodwill | 9,849,000 | $ 22,353,000 | ||
Goodwill write off | 12,500,000 | |||
Trademark wrote off | 1,000 | |||
Vertex Reporting Unit [Member] | ||||
Entity Listings [Line Items] | ||||
Goodwill | $ 9,800,000 | |||
Vertex Reporting Unit [Member] | Trade Names [Member] | ||||
Entity Listings [Line Items] | ||||
Impairment of Intangible Assets (Excluding Goodwill) | $ 100,000 | |||
Southern Reporting Unit [Member] | Trade Names [Member] | ||||
Entity Listings [Line Items] | ||||
Impairment of Intangible Assets (Excluding Goodwill) | $ 100,000 | $ 200,000 | $ 100,000 |
Principal repayment obligations
Principal repayment obligations for succeeding fiscal years are as follows: (Details) $ in Thousands | Dec. 31, 2020USD ($) | |
Debt Disclosure [Abstract] | ||
2021 | ||
2022 | 6,185 | [1] |
2023 | ||
2024 | 22,580 | |
Total | $ 28,765 | |
[1] | The Company has applied for loan forgiveness and believes that it will achieve 90-95% forgiveness, or approximately $ 5.6 5.9 million |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Dec. 10, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | May 04, 2020 | Oct. 03, 2016 |
Line of Credit Facility [Line Items] | ||||||
Debt | $ 28,800,000 | $ 83,500,000 | ||||
Weighted average interest rates | 1.90% | 3.40% | ||||
Current outstanding amount capacity | $ 47,500,000 | |||||
Long-term Line of Credit, Noncurrent | 22,580,000 | $ 83,500,000 | $ 6,200,000 | |||
Loan forgiveness | $ 5,600,000 | 5,900,000,000 | ||||
London Interbank Offered Rate (LIBOR) [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Description of LIBOR | loan may be converted to LIBOR loans in minimum amounts of $1.0 million and integral multiples of $0.1 million | |||||
Fourth Amended and Restated Loan and Security Agreement (the 2015 Loan Agreement) [Member] | Revolving Credit Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum amount outstanding | $ 115,000,000 | |||||
Additional commitment amount | $ 50,000,000 | |||||
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% | |||||
Unused borrowing facility | $ 100,000 | $ 100,000 | $ 100,000 |
The provision (benefit) for inc
The provision (benefit) for income taxes consists of: (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | |||
Federal | $ 1,814 | $ 719 | $ 3,041 |
State | 346 | 125 | 658 |
Total current | 2,160 | 844 | 3,699 |
Deferred: | |||
Federal | (2,592) | 400 | (1,246) |
State | (204) | 31 | (98) |
Total deferred | (2,796) | 431 | (1,344) |
Total | $ (636) | $ 1,275 | $ 2,355 |
A reconciliation of the U.S. Fe
A reconciliation of the U.S. Federal statutory tax rate to the effective tax rate on income before taxes is as follows: (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory rate | 21.00% | 21.00% | 21.00% |
State taxes, net of federal benefit | (1.10%) | 3.40% | 4.30% |
Impairment, non-deductible portion | 0.00% | 0.00% | 0.10% |
Share-based compensation | (1.50%) | 3.70% | 1.20% |
Non-deductible items | (0.30%) | 5.40% | 2.10% |
Valuation allowance | (9.50%) | ||
Current year divestiture | (13.90%) | ||
Other | 0.60% | (0.20%) | 2.20% |
Total effective tax rate | 4.80% | 33.30% | 21.40% |
Significant components of the C
Significant components of the Company’s deferred taxes were as follows: (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Operating lease right-of-use assets | $ 3,203 | $ 3,425 |
Inventory reserve | 856 | 1,072 |
Uniform capitalization adjustment | 1,523 | 1,633 |
Stock compensation expense | 501 | 666 |
Accrued commission | 144 | 124 |
Held for sale | 1,577 | |
Property and equipment, net | 233 | |
Refund liability | 406 | |
Other | 224 | 199 |
Total deferred tax assets | 8,667 | 7,119 |
Deferred tax liabilities | ||
Operating lease right-of-use assets | (3,075) | (3,316) |
Goodwill | (232) | (838) |
Intangible assets | (1,555) | (2,230) |
Other | (409) | (135) |
Total deferred tax liabilities | (5,271) | (6,519) |
Net deferred tax assets | $ 3,396 | $ 600 |
Leases (Details 1)
Leases (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated financing lease amortization | $ 3,570 | $ 5,887 | |
Consolidated financing lease expense | 976 | 366 | |
Net lease cost | 4,546 | 6,253 | |
Operating Expenses [Member] | |||
Consolidated operating lease expense | 3,570 | 5,887 | |
Depreciation and Amortization [Member] | |||
Consolidated financing lease amortization | 835 | 305 | |
Interest Expense [Member] | |||
Consolidated financing lease interest | $ 141 | $ 61 |
The value of the net assets and
The value of the net assets and liabilities generated by the leasing activity of the Company as lessee as of December 31, 2020 and December 31, 2019 were as follows: (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | |
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |||
Total ROU operating lease assets | $ 10,879,000 | $ 13,481,000 | |
Total lease assets | 13,672,000 | 15,911,000 | |
Total current lease obligation | 3,555,000 | 3,335,000 | |
Total long term operating lease obligation | 8,736,000 | 11,182,000 | |
Total long term lease obligation | 10,694,000 | 13,042,000 | |
Operating lease assets net of accumulated amortization | 4,300,000 | 2,300,000 | |
Financing lease assets net of accumulated amortization | 1,200,000 | 400,000 | |
Operating Lease Right-Of-Use Assets, Net [Member] | |||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |||
Total ROU operating lease assets | [1] | 10,879,000 | 13,481,000 |
Property And Equipment, Net [Member] | |||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |||
Total ROU financing lease assets | [2] | 2,793,000 | 2,430,000 |
Operating Lease Liabilities [Member] | |||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |||
Total current operating lease obligation | 2,699,000 | 2,742,000 | |
Accrued And Other Current Liabilities [Member] | |||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |||
Total current financing lease obligation | 856,000 | 593,000 | |
Other Long Term Liabilities [Member] | |||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |||
Total long term operating lease obligation | 8,736,000 | 11,182,000 | |
Operating Leases [Member] | |||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |||
Total long term financing lease obligation | $ 1,958,000 | $ 1,860,000 | |
[1] | Operating lease assets are recorded net of accumulated amortization of $ 4.3 million 2.3 million | ||
[2] | Financing lease assets are recorded net of accumulated amortization of $ 1.2 million 0.4 million |
The future minimum lease paymen
The future minimum lease payments for finance and operating lease liabilities of the Company as lessee as of December 31, 2020 were as follows: (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |
Year one | $ 4,190 |
Year two | 4,073 |
Year three | 3,407 |
Year four | 2,736 |
Year five | 1,107 |
Subsequent years | 266 |
Total lease payments | 15,779 |
Less: Interest | (1,530) |
Present value of lease liabilities | 14,249 |
Operating Leases [Member] | |
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |
Year one | 3,222 |
Year two | 3,186 |
Year three | 2,654 |
Year four | 2,330 |
Year five | 1,076 |
Subsequent years | 266 |
Total lease payments | 12,734 |
Less: Interest | (1,299) |
Present value of lease liabilities | 11,435 |
Financing Leases [Member] | |
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | |
Year one | 968 |
Year two | 887 |
Year three | 753 |
Year four | 406 |
Year five | 31 |
Subsequent years | |
Total lease payments | 3,045 |
Less: Interest | (231) |
Present value of lease liabilities | $ 2,814 |
The weighted average remaining
The weighted average remaining lease terms and discount rates of the leases held by the Company as of December 31, 2020 and 2019 were as follows (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Leases [Member] | ||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | ||
Weighted average term in years | 4 years 2 months 12 days | 4 years 10 months 24 days |
Weighted average interest rate | 5.30% | 5.30% |
Financing Leases [Member] | ||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | ||
Weighted average term in years | 3 years 4 months 24 days | 4 years 2 months 12 days |
Weighted average interest rate | 4.70% | 5.30% |
The cash outflows of the leasin
The cash outflows of the leasing activity of the Company as lessee for the twelve months ended December 31, 2020 and 2019 were as follows: (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Finance Lease, Principal Payments | $ 837 | $ 293 | |
Operating Activities [Member] | |||
Operating cash outflows from operating leases | 3,442 | 6,140 | |
Finance Lease, Principal Payments | $ 140 | $ 54 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2020 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Impacted on Retained earnings | $ 100,000 | ||
Rent expenses | $ 3,700,000 | ||
Lease Agreement [Member] | Vertex's Massachusetts [Member] | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Early termination liability expenses | $ 2,200,000 | ||
Lease Agreements [Member] | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Financing lease obligations | $ 2,500,000 | $ 1,200,000 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Mar. 07, 2014 | |
Equity, Class of Treasury Stock [Line Items] | |||
Preferred stock, authorized | 5,000,000 | 5,000,000 | |
Series A Preferred Stock [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Preferred stock, authorized | 100,000 | ||
2017 Stock Plan [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Number of shares surrender withholding taxes | 25,201 | 26,731 | |
Share Repurchase Program [Member] | Common Stock [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Maximum number of shares authorized | $ 25,000,000 | ||
Number of shares repurchases | 235,500 | ||
Value of shares repurchases | $ 1,100,000 |
Retirement-related Benefits (De
Retirement-related Benefits (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |||
Percentage of employer's contribution | 100.00% | ||
Defined Contribution Plan, Employer Matching Contribution, Percent of Match | 1.00% | ||
Defined Contribution Plan, Cost | $ 100,000 | $ 200,000 | $ 200,000 |
Defined Contribution Plan, Employer Discretionary Contribution Amount | 100,000 | 100,000 | $ 100,000 |
Defined Benefit Plan, Benefit Obligation | $ 800,000 | $ 1,300,000 | |
Discount rate | 2.00% | 3.20% | |
Fair Value of Assets Acquired | $ 800,000 | $ 1,300,000 |
Schedule of stock option activi
Schedule of stock option activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Outstanding-Beginning of year | 122 | 154 |
Outstanding-Beginning of year | $ 13.72 | $ 13.40 |
Outstanding-Beginning of year | $ 0 | $ 0 |
Outstanding-Beginning of year | 1 year 9 months | 2 years 6 months 7 days |
Granted | 0 | 0 |
Granted | $ 0 | |
Exercised | 0 | 0 |
Exercised | $ 0 | |
Forfeited | (13) | (22) |
Forfeited | $ 13.23 | $ 13.04 |
Expired | (19) | (10) |
Expired | $ 12.14 | $ 10.32 |
Outstanding-End of year | 90 | 122 |
Outstanding-End of year | $ 14.11 | $ 13.72 |
Outstanding-End of year | $ 0 | $ 0 |
Outstanding-End of year | 11 months 19 days | 1 year 9 months |
Exercisable-End of year | 90 | 122 |
Exercisable-End of year | $ 14.11 | $ 13.72 |
Exercisable-End of year | $ 0 | $ 0 |
Exercisable - End of year | 11 months 19 days | 1 year 9 months |
Schedule of restricted stock ac
Schedule of restricted stock activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Non vested | 654 | 259 |
Non-vested | $ 5.18 | $ 6.78 |
Unit Granted | 55 | 511 |
Grant date | $ 2.86 | $ 3.84 |
Vested | (95) | (107) |
Vested | $ 5.59 | $ 7.24 |
Cancelled/Forfeited | (173) | (9) |
Cancelled/Forfeited | $ 5.33 | $ 6.34 |
Units Expired | 0 | 0 |
Units options expired | ||
Non vested | 441 | 654 |
Non-vested | $ 4.26 | $ 5.18 |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Non vested | 277 | 215 |
Non-vested | $ 6.83 | $ 7.59 |
Unit Granted | 10 | 125 |
Grant date | $ 2.19 | $ 5.88 |
Vested | (137) | (60) |
Vested | $ 6.94 | $ 7.59 |
Cancelled/Forfeited | (18) | (3) |
Cancelled/Forfeited | $ 6.18 | $ 7.65 |
Units Expired | 0 | 0 |
Units options expired | ||
Non vested | 132 | 277 |
Non-vested | $ 6.44 | $ 6.83 |
Incentive Plans (Details Narrat
Incentive Plans (Details Narrative) - USD ($) | Nov. 03, 2020 | Jun. 06, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | May 07, 2019 | Dec. 31, 2018 | Dec. 03, 2019 | Mar. 12, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Income Tax Expense (Benefit) | $ (636,000) | $ 1,275,000 | $ 2,355,000 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 90 | 122 | ||||||
Share-based Payment Arrangement, Noncash Expense | $ 876,000 | $ 1,471,000 | 1,298,000 | |||||
Share-based Payment Arrangement, Expense, Tax Benefit | $ 200,000 | $ 200,000 | $ 200,000 | |||||
Share-based Payment Arrangement, Option [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Grant | 0 | 0 | 0 | |||||
Income Tax Expense (Benefit) | $ 0 | $ 0 | $ 0 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 0 | 0 | 0 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 0 | |||||||
Grant-date fair value of options vested | 0 | $ 0 | ||||||
Restricted Stock Units (RSUs) [Member] | Chief Executive Officer [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Grant | 10,000 | |||||||
Restricted Stock [Member] | Chief Financial Officer [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Grant | 55,000 | |||||||
Restricted Stock [Member] | Non Employee Directors [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares Granted, Value, Share-based Payment Arrangement, before Forfeiture | $ 60,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 58,920 | |||||||
2017 Stock Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 800,000 | |||||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 17 months | |||||||
Common Stock, Capital Shares Reserved for Future Issuance | 1,631,123 | |||||||
2017 Stock Plan [Member] | Stock Appreciation Rights (SARs) [Member] | Employees And Directors [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares grants | 2,500,000 | |||||||
2017 Stock Plan [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Liability reclassified to additional paid-in-capital | $ 400,000 | |||||||
Share-based Payment Arrangement, Plan Modification, Incremental Cost | $ 100,000 | |||||||
2017 Stock Plan [Member] | Restricted Stock Units (RSUs) [Member] | Minimum [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | |||||||
2017 Stock Plan [Member] | Restricted Stock Units (RSUs) [Member] | Maximum [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | |||||||
2017 Stock Plan [Member] | Restricted Stock [Member] | Director [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares grants | 39,719 | |||||||
2017 Stock Plan [Member] | Restricted Stock [Member] | Chief Financial Officer [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares grants | 250,000 | |||||||
2017 Stock Plan [Member] | Restricted Stock [Member] | Former Chief Financial Officer [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares grants | 125,000 | |||||||
2017 Stock Plan [Member] | Voting Shares Of Restricted Stock [Member] | Chief Financial Officer [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares grants | 19,531 | |||||||
2017 Stock Plan [Member] | Voting Shares Of Restricted Stock [Member] | Chief Executive Officer [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares grants | 78,125 | |||||||
2017 Stock Plan [Member] | Performance Shares [Member] | Chief Financial Officer [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares grants | 13,228 | |||||||
2017 Stock Plan [Member] | Performance Shares [Member] | Chief Executive Officer [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares grants | 52,910 | |||||||
2006 Stock Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Expired date | May 1, 2017 | |||||||
2006 Stock Plan [Member] | Share-based Payment Arrangement, Option [Member] | Minimum [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |||||||
2006 Stock Plan [Member] | Share-based Payment Arrangement, Option [Member] | Maximum [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | |||||||
2006 Stock Plan [Member] | Share-based Payment Arrangement, Option [Member] | Director [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Dec. 31, 2020USD ($) |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Purchase commitments for fixed inventory | $ 32,000,000 |
Loan Agreement [Member] | Vendors [Member] | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Outstanding line of credit | $ 700,000 |
Schedule of unaudited quarterly
Schedule of unaudited quarterly results of operations (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Sales | $ 65,460 | $ 70,247 | $ 66,777 | $ 83,533 | $ 82,287 | $ 85,403 | $ 85,326 | $ 85,270 | $ 286,017,000 | $ 338,286,000 | $ 356,858,000 | |
Gross profit | 14,231 | 14,990 | 14,236 | 19,592 | 18,695 | 19,431 | 20,537 | 21,259 | 63,049,000 | 79,922,000 | 85,208,000 | |
Operating income | (10,210) | [1] | (519) | (2,188) | 1,586 | 76 | (87) | 3,030 | 3,863 | (11,331,000) | 6,882,000 | 13,898,000 |
Net income | $ (10,229) | [1] | $ (735) | $ (2,163) | $ 545 | $ (656) | $ (721) | $ 1,643 | $ 2,284 | $ (12,582,000) | $ 2,550,000 | $ 8,636,000 |
Earnings per share: | ||||||||||||
Basic | $ (0.61) | [1] | $ (0.04) | $ (0.13) | $ 0.03 | $ (0.04) | $ (0.04) | $ 0.10 | $ 0.14 | $ (0.76) | $ 0.16 | $ 0.53 |
Diluted | $ (0.61) | [1] | $ (0.04) | $ (0.13) | $ 0.03 | $ (0.04) | $ (0.04) | $ 0.10 | $ 0.14 | $ (0.76) | $ 0.15 | $ 0.52 |
Loss on divestitures | $ 8,727 | |||||||||||
[1] | This includes the loss on divestitures/HFS classification of $ 8,727 |
Schedule of net assets and net
Schedule of net assets and net liabilities classified as held for sale (Details) - Southwest Reporting Units [Member] - Assets And Liabilities Held For Sale [Member] | Dec. 31, 2020USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Inventory | $ 5,145 |
Prepaid expenses | 38 |
PP&E | 6,877 |
Intangibles | 1,020 |
Other assets | 29 |
Total assets | 13,109 |
Less: Loss on classification to held for sale | (6,711) |
Assets classified as held for sale | 6,398 |
Accounts payable | 969 |
Accrued liabilities | 394 |
Long term lease liabilities | 35 |
Liabilities classified as held for sale | $ 1,398 |
Divestitures (Details Narrative
Divestitures (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 31, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash | $ 17,500,000 | |||
Income Tax Expense (Benefit) | (636,000) | $ 1,275,000 | $ 2,355,000 | |
Southern Reporting Unit [Member] | Asset Purchase Agreement [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash | 17,500,000 | |||
Net of working capital | 1,500,000 | |||
Due form escrow | 1,000,000 | |||
Pre tax loss on disposal | 2,000,000 | |||
Loss recognized including selling costs | 300,000 | |||
Income Tax Expense (Benefit) | 15,400,000 | |||
Loss on classification to held for sale | 6,700,000 | |||
Southwest Reporting Units [Member] | Asset Purchase Agreement [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash | $ 5,000,000 | |||
Loss recognized including selling costs | $ 100,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Mar. 25, 2021 | Mar. 12, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | ||||
Cash | $ 4,096,000 | |||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Proceeds from Sale of Other Assets | $ 2,900,000 | |||
Cash | 3,400,000 | |||
Escrow account | $ 800,000 | |||
Subsequent Event [Member] | Omni Cable LLC [Member] | ||||
Subsequent Event [Line Items] | ||||
Share price (in dollars per share) | $ 5.30 | |||
Stock-based equity awards outstanding | 300,461 |