Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 28, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-37480 | |
Entity Registrant Name | UNIQUE FABRICATING, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-1846791 | |
Entity Address, Address Line One | 800 Standard Parkway | |
Entity Address, City or Town | Auburn Hills | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48326 | |
City Area Code | 248 | |
Local Phone Number | 853-2333 | |
Title of 12(b) Security | Common Stock, par value $.001 per share | |
Trading Symbol | UFAB | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,733,147 | |
Entity Central Index Key | 0001617669 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 480 | $ 742 |
Accounts receivable, net of reserves of approximately $0.5 million and $1.3 million at September 30, 2022 and December 31, 2021, respectively | 25,437 | 23,469 |
Inventory, net | 12,521 | 13,770 |
Prepaid expenses and other current assets: | ||
Prepaid expenses and other | 6,114 | 3,270 |
Refundable taxes | 1,925 | 3,738 |
Total current assets | 46,477 | 44,989 |
Property, plant, and equipment, net | 21,062 | 22,567 |
Goodwill | 0 | 16,996 |
Intangible assets | 4,208 | 5,161 |
Other assets | ||
Operating leases | 10,068 | 9,776 |
Investments, at cost | 1,054 | 1,054 |
Deposits and other assets | 901 | 755 |
Deferred tax asset | 351 | 2,379 |
Total assets | 84,121 | 103,677 |
Current liabilities: | ||
Accounts payable | 13,310 | 10,056 |
Current maturities of long-term debt | 25,398 | 28,884 |
Income taxes payable | 46 | 303 |
Revolver, current maturities | 22,343 | 19,541 |
Accrued compensation | 1,516 | 1,149 |
Other accrued liabilities | 3,258 | 3,478 |
Total current liabilities | 65,871 | 63,411 |
Other long-term liabilities: | ||
Other liabilities | 8,830 | 9,139 |
Total liabilities | 74,701 | 72,550 |
Stockholders’ equity: | ||
Common stock, $0.001 par value: 25,000,000 shares authorized and 11,733,147 and 11,733,147 issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 12 | 12 |
Additional paid-in-capital | 50,474 | 50,349 |
Accumulated deficit | (41,066) | (19,234) |
Total stockholders’ equity | 9,420 | 31,127 |
Total liabilities and stockholders’ equity | $ 84,121 | $ 103,677 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 0.5 | $ 1.3 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock, shares issued (in shares) | 11,733,147 | 11,733,147 |
Common stock, shares outstanding (in shares) | 11,733,147 | 11,733,147 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Net sales | $ 34,503 | $ 29,909 | $ 104,847 | $ 95,603 |
Cost of sales | 31,454 | 26,629 | 91,777 | 81,845 |
Gross profit | 3,049 | 3,280 | 13,070 | 13,758 |
Selling, general, and administrative expenses | 4,433 | 5,741 | 13,646 | 17,636 |
Impairment | 4,833 | 5,115 | 16,996 | 5,115 |
Operating loss | (6,217) | (7,576) | (17,572) | (8,993) |
Other income (expense): | ||||
Other, net | 176 | 6,041 | 206 | 6,080 |
Interest expense | (789) | (843) | (1,952) | (2,305) |
Other income (expense), net | (613) | 5,198 | (1,746) | 3,775 |
Loss before income taxes | (6,830) | (2,378) | (19,318) | (5,218) |
Income tax expense (benefit) | 3,722 | (522) | 2,514 | 216 |
Net loss | $ (10,552) | $ (1,856) | $ (21,832) | $ (5,434) |
Net loss per share: | ||||
Basic (in dollars per share) | $ (0.90) | $ (0.19) | $ (1.86) | $ (0.55) |
Diluted (in dollars per share) | $ (0.90) | $ (0.19) | $ (1.86) | $ (0.55) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2020 | 9,779,147 | |||
Stockholders' equity, beginning balance at Dec. 31, 2020 | $ 33,865 | $ 10 | $ 46,126 | $ (12,271) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (1,069) | (1,069) | ||
Stock option expense | 27 | 27 | ||
Stockholders' equity, ending balance (in shares) at Mar. 31, 2021 | 9,779,147 | |||
Stockholders' equity, ending balance at Mar. 31, 2021 | 32,823 | $ 10 | 46,153 | (13,340) |
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2020 | 9,779,147 | |||
Stockholders' equity, beginning balance at Dec. 31, 2020 | 33,865 | $ 10 | 46,126 | (12,271) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | $ (5,434) | |||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2021 | 11,733,147 | |||
Stockholders' equity, ending balance at Sep. 30, 2021 | $ 32,600 | $ 12 | 50,293 | (17,705) |
Stockholders' equity, beginning balance (in shares) at Mar. 31, 2021 | 9,779,147 | |||
Stockholders' equity, beginning balance at Mar. 31, 2021 | 32,823 | $ 10 | 46,153 | (13,340) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (2,509) | (2,509) | ||
Stock option expense | 256 | 256 | ||
Stockholders' equity, ending balance (in shares) at Jun. 30, 2021 | 9,779,147 | |||
Stockholders' equity, ending balance at Jun. 30, 2021 | 30,570 | $ 10 | 46,409 | (15,849) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (1,856) | |||
Stock option expense | 49 | 49 | ||
Issuance of common stock and warrants (in shares) | 1,954,000 | |||
Issuance of common stock and warrants | $ 3,837 | $ 2 | 3,835 | |
Stockholders' equity, ending balance (in shares) at Sep. 30, 2021 | 11,733,147 | |||
Stockholders' equity, ending balance at Sep. 30, 2021 | $ 32,600 | $ 12 | 50,293 | (17,705) |
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2021 | 11,733,147 | |||
Stockholders' equity, beginning balance at Dec. 31, 2021 | 31,127 | $ 12 | 50,349 | (19,234) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (569) | (569) | ||
Stock option expense | 41 | 41 | ||
Stockholders' equity, ending balance (in shares) at Mar. 31, 2022 | 11,733,147 | |||
Stockholders' equity, ending balance at Mar. 31, 2022 | 30,599 | $ 12 | 50,390 | (19,803) |
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2021 | 11,733,147 | |||
Stockholders' equity, beginning balance at Dec. 31, 2021 | 31,127 | $ 12 | 50,349 | (19,234) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (21,832) | |||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2022 | 11,733,147 | |||
Stockholders' equity, ending balance at Sep. 30, 2022 | 9,420 | $ 12 | 50,474 | (41,066) |
Stockholders' equity, beginning balance (in shares) at Mar. 31, 2022 | 11,733,147 | |||
Stockholders' equity, beginning balance at Mar. 31, 2022 | 30,599 | $ 12 | 50,390 | (19,803) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (10,711) | (10,711) | ||
Stock option expense | 42 | 42 | ||
Stockholders' equity, ending balance (in shares) at Jun. 30, 2022 | 11,733,147 | |||
Stockholders' equity, ending balance at Jun. 30, 2022 | 19,930 | $ 12 | 50,432 | (30,514) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (10,552) | (10,552) | ||
Stock option expense | 42 | 42 | ||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2022 | 11,733,147 | |||
Stockholders' equity, ending balance at Sep. 30, 2022 | $ 9,420 | $ 12 | $ 50,474 | $ (41,066) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (21,832) | $ (5,434) |
Adjustments to reconcile net loss to net cash provided by (used for) operating activities: | ||
Impairment of goodwill | 16,996 | 5,115 |
Depreciation and amortization | 3,433 | 4,271 |
Amortization of debt issuance costs | 169 | 158 |
Loss on sale of assets | 0 | (12) |
Bad debt adjustment | (47) | (197) |
Gain on derivative instrument | (736) | (412) |
Gain on forgiveness of debt | 0 | (6,000) |
Stock option expense | 125 | 332 |
Accrued in-kind interest on long term debt | 152 | 25 |
Deferred income taxes | 2,028 | (679) |
Changes in operating assets and liabilities that provided (used) cash: | ||
Accounts receivable | (1,921) | (1,626) |
Inventory | 1,249 | (5,031) |
Prepaid expenses and other assets | (1,177) | 2,608 |
Accounts payable | 3,300 | 3,125 |
Other assets and liabilities, net | 25 | 154 |
Net cash provided by (used for) operating activities | 1,764 | (3,603) |
Cash Flows from Investing Activities: | ||
Capital expenditures | (1,048) | (2,432) |
Proceeds from sale of property, plant, and equipment | 0 | 100 |
Net cash used for investing activities | (1,048) | (2,332) |
Cash Flows from Financing Activities: | ||
Net change in bank overdraft | 27 | (710) |
Payments on term loans and capital expenditure line | (3,684) | (2,597) |
Payments on revolving credit facilities | (43,727) | (30,087) |
Proceeds from revolving credit facilities | 46,406 | 35,671 |
Proceeds from the issuance of common stock and warrants | 0 | 4,044 |
Net cash provided by (used for) financing activities | (978) | 6,321 |
Cash and Cash Equivalents: | ||
Net increase (decrease) in cash and cash equivalents | (262) | 386 |
Cash and cash equivalents at beginning of period | 742 | 760 |
Cash and cash equivalents at end of period | 480 | 1,146 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 2,383 | 2,178 |
Cash paid for income taxes | $ 641 | $ 761 |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Nature of Business and Basis of Presentation | Nature of Business and Basis of Presentation Nature of Business Unique Fabricating, Inc. (the “Company”) engineers and manufactures components for customers in the transportation, appliance, medical, and consumer / off-road markets. The Company’s solutions are comprised of multi-material foam, rubber, and plastic components, and utilized in noise, vibration and harshness (“NVH”) management, acoustical management, water and air sealing, decorative and other functional applications. The Company leverages proprietary manufacturing processes, including die cutting, thermoforming, compression molding, fusion molding, and reaction injection molding to manufacture a wide range of products, including air management products, heating, ventilating, and air conditioning (“HVAC”), seals, fender stuffers, air ducts, acoustical insulation, door water shields, gas tank pads, light gaskets, topper pads, mirror gaskets, glove box liners, personal protection equipment, and packaging. The Company operates as one reportable segment and is headquartered in Auburn Hills, Michigan. Basis of Presentation The Company’s condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying condensed consolidated financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company, its results of operations, and its cash flows. The interim results for the periods presented may not be indicative of the Company's actual annual results. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Going Concern The Company’s condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of December 31, 2020 and March 31, 2021, the Company was in violation of its financial covenants, as defined in the Company’s Credit Agreement ( Note 7 ). The Company entered into a forbearance agreement, dated April 9, 2021, which allowed the Company to be able to borrow on its revolving line of credit, subject to the terms and conditions to making a revolving credit advance, including availability, and the lenders agreed, subject to the terms of the forbearance agreement, as amended, to forbear from enforcing their rights or seeking to collect payment of the Company’s debt or disposing of the collateral securing the debt. As of September 30, 2021, the Company was also in violation of the required Minimum Consolidated EBITDA covenant (as amended by the Second Amendment to the Forbearance Agreement dated September 21, 2021). On December 9, 2021, the Company entered into the Third Amendment to Forbearance Agreement with respect to the Amended and Restated Credit Agreement, as amended. The Lenders in the Third Amendment to the Forbearance Agreement, among other things, agreed to forbear with respect to the Minimum Consolidated EBITDA covenant violation, as of September 30, 2021, and to suspend compliance with the Minimum Consolidated EBITDA covenant during the remainder of the forbearance period. The Third Amendment included a new covenant that began on December 15, 2021, which is tested weekly on a rolling basis and requires that the Company’s actual cumulative total cash disbursements for the period being tested not exceed total cash disbursements projected by the Company for the same period by more than 15% at any time during the forbearance period. The Third Amendment also reduced the Revolving Credit Aggregate Commitment from $27 million to $25 million. As of December 31, 2021, the Company was in violation of the required Minimum Liquidity covenant, as provided in the Second Amendment to the Forbearance Agreement. As a result, on February 4, 2022, the Company entered into the Fourth Amendment to Forbearance Agreement. The Lenders in the Fourth Amendment to the Forbearance Agreement agreed to waive the Minimum Liquidity covenant violation. Between February 25, 2022, and September 9, 2022, the Company entered into six forbearance agreement amendments. Each of these amendments extended the Forbearance Period. The Fifth Amendment to Forbearance Agreement (entered into February 25, 2022) extended the Forbearance Period from February 28, 2022 to March 11, 2022. The Sixth Amendment to Forbearance Agreement (entered into March 11, 2022) extended the Forbearance Period from March 11, 2022 to May 30, 2022. The Seventh Amendment to Forbearance Agreement (entered into May 26, 2022) extended the Forbearance Period from May 30, 2022 to June 13, 2022. The Eighth Amendment to Forbearance Agreement (entered into June 13, 2022) extended the Forbearance Period from June 13, 2022 to July 14, 2022. The Ninth Amendment to Forbearance Agreement (entered into July 14, 2022) extended the Forbearance Period from July 14, 2022 to September 12, 2022. The Tenth Amendment to Forbearance Agreement (entered into September 9, 2022) extended the Forbearance Period from September 12, 2022 to October 24, 2022. On October 4, 2022, the Company entered into the Eleventh Amendment to Forbearance Agreement, which extended the Forbearance Period from October 24, 2022 to November 7, 2022. The Eleventh Amendment includes certain amendments to the Credit Agreement and permits the Company to raise up to $4 million of debt financing, which is further described in Note 18 . The Eleventh Amendment also amends several financial covenants including: an amendment to the weekly Minimum Liquidity covenant, an amendment to the minimum sales covenant for the two month period ending September 30, 2022 and an amendment to the weekly cash disbursement covenant. The defaults, if not waived by our lenders, allows the lenders to accelerate the maturity of the debt, making it immediately due and payable. Accordingly, all debt subject to the Credit Agreement, currently totaling $47.7 million, has been classified as current as of September 30, 2022. The Company does not have sufficient cash and cash equivalents on hand or available liquidity to repay such debt or meet its obligations thereunder as they become due through twelve months from date of issuance of these condensed consolidated financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company has engaged a financial adviser and has initiated a process to obtain financing to repay the existing bank borrowings and fund operational needs. There can be no assurance that the Company will be able to obtain such financing or if it were to obtain financing as to its terms. In addition, if the Company were not able to obtain financing, there can be no assurance that current bank lenders will consent to an amendment or waiver to cure existing defaults or that they will not take other action. In response to these conditions, the Company is discussing with its bank lenders entering into an amendment and waiver to cure the covenant defaults. There is not any assurance that the lenders will waive such non compliance or agree to an amendment to the current provisions. Even if the lenders were to agree to waive the failures to comply as of December 31, 2020, March 31, 2021, and September 30, 2021, there cannot be any assurance that, at any future date at which compliance is measured, we will be able to comply with the covenants contained in the Credit Agreement, as amended, given the industry-wide and other challenges that we face, as described elsewhere herein, or that our lenders would waive a default if that were to occur. Furthermore, there can be no assurance that the Company will be able to enter into an amendment or waiver with the lenders or if it enters into an amendment, what the terms, restrictions, and covenants of the amendment will contain. These plans have not been finalized and are not within the Company’s control, and therefore cannot be deemed probable. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Concentration Risks The Company is exposed to significant concentration risks as follows: Customer and Credit — During the three and nine months ended September 30, 2022 and September 30, 2021, the Company’s net sales were principally derived from customers engaged in the North American automotive industry. The following table presents the Company's sales directly to General Motors Company (“GM”), Yanfeng Automotive Interiors, Stellantis N.V. (formerly Fiat Chrysler Automobiles), and Ford Motor Company (“Ford”) as a percentage of total net sales: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 General Motors Company 9 % 5 % 9 % 7 % Yanfeng Automotive Interiors 7 % 10 % 8 % 8 % Stellantis N.V. 7 % 8 % 8 % 7 % Ford Motor Company 4 % 3 % 4 % 4 % Furthermore, the Company derived net sales to the customers listed in the above table indirectly through other customers. International Operations — The Company manufactures and sells products outside of the United States primarily in Mexico and Canada. Foreign operations are subject to various political, economic and other risks and uncertainties inherent in foreign countries. Among other risks, the Company’s operations may be subject to the risks of: restrictions on transfers of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; political conditions; and governmental regulations. The following table presents the percentage of the Company's total production represented by production in Mexico and Canada: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Mexico 27 % 23 % 25 % 24 % Canada 8 % 8 % 8 % 9 % The following table presents the percentage of the Company's total net sales represented by net sales from operations located in Mexico and Canada: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Mexico 27 % 24 % 26 % 25 % Canada 7 % 8 % 8 % 9 % Labor Markets — At September 30, 2022, 51% of our employees were working in the United States, 45% were working in Mexico, and 4% were working in Canada. In the United States manufacturing facilities, 28% were covered under a collective bargaining agreement which expires in August 2025 while another 10% were covered under a separate collective bargaining agreement that expires in February 2023. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses,” which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. In November 2019, the FASB issued ASU 2019-10, which established the effective date of the new standard for smaller reporting companies as fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact, if any, the adoption of the new credit losses model will have on its financial statements. In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform”. The ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or any other reference rate expected to be discontinued. In January 2021, the FASB issued ASU 2021-01 - Reference Rate Reform (Topic 848). The amendments in this ASU clarify that certain option expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, it will be in effect for a limited time through December 31, 2022. |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues The following table presents the Company's net sales disaggregated by major sales channel: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (dollars in thousands) Net Sales Transportation $ 30,789 $ 26,124 $ 93,457 $ 84,741 Appliance 3,109 3,104 9,388 9,247 Other 605 681 2,002 1,615 Total $ 34,503 $ 29,909 $ 104,847 $ 95,603 General Recognition Policy Revenue is recognized by the Company once all performance obligations under the terms of a contract with a Company's customer is satisfied. Generally this occurs with the transfer of control to a customer of its transportation, appliance, and other products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products. The Company’s payment terms vary by the type and location of its customers and the products offered. The term between invoicing and when payment is due is not significant. In general for sales arrangements, the Company deems control to transfer at a single point in time and recognizes revenue when it ships products from its manufacturing facilities to its customers. Once a product has shipped, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The Company considers control to transfer upon shipment because the Company has a present right to payment at that time, the customer has legal title to the asset, and the customer has significant risks and rewards of ownership of the asset. Contract Balances |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Inventories consist of the following: September 30, 2022 December 31, 2021 (dollars in thousands) Raw materials $ 8,608 $ 9,242 Work in progress 1,243 990 Finished goods 2,670 3,538 Total inventory $ 12,521 $ 13,770 The Company periodically evaluates inventory for obsolescence, excess quantities, slow moving goods and other impairments of value and establishes reserves for any identified impairments. The allowance for obsolete inventory was $1.0 million at September 30, 2022 and $1.2 million at December 31, 2021. Included in inventory are assets located in Mexico with a carrying amount of $3.8 million at September 30, 2022 and $4.0 million at December 31, 2021, and assets located in Canada with a carrying amount of $1.3 million at September 30, 2022 and $1.1 million at December 31, 2021. |
Property, Plant, and Equipment,
Property, Plant, and Equipment, Net | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant, and Equipment, Net | Property, Plant, and Equipment, Net Property, plant, and equipment, net consists of the following: September 30, 2022 December 31, 2021 Depreciable (dollars in thousands) Land $ 538 $ 538 Buildings 7,630 7,630 23 – 40 Shop equipment 28,015 26,049 7 – 10 Leasehold improvements 1,344 1,283 3 – 10 Office equipment 3,102 3,047 3 – 7 Mobile equipment 50 50 3 Construction in progress 442 1,554 Total cost 41,121 40,151 Less: Accumulated depreciation 20,059 17,584 Net property, plant, and equipment, net $ 21,062 $ 22,567 Depreciation expense was $0.8 million and $2.5 million for the three and nine months ended September 30, 2022, respectively, and $0.8 million and $2.3 million for the three and nine months ended September 30, 2021, respectively. Included in property, plant, and equipment, net are assets located in Mexico with a carrying amount of $3.4 million and $3.5 million at September 30, 2022 and December 31, 2021, respectively, and assets located in Canada with a carrying amount of $0.3 million and $0.4 million at September 30, 2022 and December 31, 2021, respectively. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Changes in the carrying amount of goodwill are as follows: (dollars in thousands) Balance at December 31, 2021 Goodwill $ 28,871 Accumulated impairment losses (11,875) Net beginning balance 16,996 Second quarter impairment (12,163) Balance at June 30, 2022 4,833 Third quarter impairment (4,833) Balance at September 30, 2022 $ — 2022 Goodwill Impairments The Company experienced a sustained decline in market capitalization through the second quarter of 2022 representing a potential indicator of impairment. Furthermore, the Company continues to experience repercussions from the global semiconductor shortage, the most impactful being the decline in sales to our automotive customers, as North American automotive production volumes have been lower than pre-pandemic levels. In the second quarter of 2022, the Company identified these circumstances and concluded it was more likely than not that the fair value of its reporting unit is less than its carrying amount, and performed an interim quantitative assessment. The quantitative assessment was performed as of June 30, 2022, utilizing the income approach. The analysis required the comparison of the Company’s carrying value with it’s fair value, with an impairment recorded for any excess of carrying value over the fair value. The discounted cash flow method was used to determine the fair value of the reporting unit under the income approach. Key assumptions used in the discounted cash flow analysis included a discount rate of 18.6%, forecasted revenue for the remainder of 2022 through 2028, a terminal growth rate for cash flows of 3%, and EBITDA margin of 10.8% by 2026. The results of the quantitative analysis performed indicated the carrying value of the reporting unit exceeded the fair value of the reporting unit as of June 30, 2022. As a result, the Company recorded a $12.2 million impairment charge during the three months ended June 30, 2022. During three months ended September 30, 2022, the Company experienced another sharp decline in market capitalization representing another potential indicator of impairment. The repercussions from the global semiconductor shortage have continued, the most impactful being the sustained depressed sales volume to our automotive customers. The Company concluded it was more likely than not that the fair value of its reporting unit is less than its carrying amount, and performed another interim quantitative assessment. This quantitative assessment was performed as of September 30, 2022, utilizing the income approach. The discounted cash flow method was used to determine the fair value of the reporting unit under the income approach. Key assumptions used in the discounted cash flow analysis included a discount rate of 19.9%, forecasted revenue for the remainder of 2022 through 2028, a terminal growth rate for cash flows of 3.0%, and EBITDA margin of 10.8% by 2026. The results of the quantitative analysis performed indicated the carrying value of the reporting unit exceeded the fair value of the reporting unit as of September 30, 2022. As a result, the Company recorded a $4.8 million impairment charge on the condensed consolidated statements of operations for the three months ended September 30, 2022. The impairment charge included in the condensed consolidated statements of operations for the nine months ended September 30, 2022 was $17.0 million. |
Long-term Debt
Long-term Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt The Company’s long-term debt consists of the following: September 30, 2022 December 31, 2021 (dollars in thousands) US Term Loan, payable to lenders in quarterly installments of $0.8 million through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 7.0% and 5.5% per annum at September 30, 2022 and December 31, 2021, respectively. At September 30, 2022, the balance of the US Term Loan is presented net of a debt discount of $79 thousand from costs paid to or on behalf of the lenders. $ 18,082 $ 20,383 CA Term Loan, payable to lenders in quarterly installments of $0.4 million through November 7, 2023, with a lump sum due at maturity. The effective interest rate was 7.0% and 5.5% per annum at September 30, 2022 and December 31, 2021, respectively. At September 30, 2022, the balance of the CA Term Loan is presented net of a debt discount of $34 thousand from costs paid to or on behalf of the lenders. 6,369 7,437 Capital expenditure line payable to lenders in quarterly installments of 12.5% per annum through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 7.0% and 5.5% per annum at September 30, 2022 and December 31, 2021, respectively. 947 1,064 Total debt excluding Revolver $ 25,398 $ 28,884 As of September 30, 2022 and December 31, 2021, the fair value of the Company’s debt approximates 90% of book value based on the variable terms. Credit Agreement On November 8, 2018, Unique Fabricating NA, Inc. (the “US Borrower”) and Unique-Intasco Canada, Inc. (the “CA Borrower” and together with US Borrower, the “Borrowers”) and Citizens Bank, National Association (“Citizens”), acting as lender and Administrative Agent, and other lenders (collectively, the “Lenders”), entered into an Amended and Restated Credit Agreement (the “Credit Agreement”), which amended and restated the Original Credit Agreement entered into on April 29, 2016 (as amended, the “Original Credit Agreement”). The Credit Agreement is a five-year agreement and provided for borrowings up to an aggregate principal amount of $73.0 million. The Credit Agreement, which is a senior secured credit facility comprised of a revolving line of credit of up to $30.0 million (the “Revolver”) to the US Borrower, a $26.0 million principal amount term loan (the “US Term Loan”) to the US Borrower, a $12.0 million principal amount term loan (the “CA Term Loan”) to the CA Borrower, and a two-year line to fund capital expenditures of up to $2.5 million through November 8, 2019 and $5.0 million thereafter through November 8, 2020 to the US Borrower (the “Capital Expenditure Line”). The Credit Agreement has a maturity date for all borrowings of November 7, 2023. The Credit Agreement, as amended, bore interest at the Company’s election of either (i) the greater of the Prime Rate or the Federal Funds Effective Rate (the “Base Rate”) or (ii) the LIBOR rate, plus an applicable margin ranging from 1.75% to 3.25% per annum in the case of the Base Rate and 2.75% to 4.25% per annum in the case of the LIBOR rate, in each case, based on senior leverage ratio thresholds, measured quarterly, as increased by the Waiver and Fourth Amendment to the Credit Agreement. The Seventh Amendment to the Credit Agreement added a 1.0% LIBOR Floor and 2.0% Base Rate Floor. The First Amendment to the Forbearance Agreement increased the per annum interest rate from 4.25% to 4.50% for the duration of the Forbearance Period. Furthermore, the First Amendment imposes Payment in Kind (“PIK”) additional interest of 0.5% per annum on all outstanding debt subject to the Credit Agreement, which is payable on at the termination date of the Forbearance Agreement, or earlier in the event of a Forbearance Termination event, as defined. As of September 30, 2022, $22.5 million was outstanding under the Revolver. This amount is gross of debt issuance costs which are further described in the next section. The Revolver had an effective interest rate of 7.0% percent per annum at September 30, 2022, and is secured by substantially all of the Company’s assets. At September 30, 2022, the maximum additional available borrowings under the Revolver was $1.3 million, which includes a reduction for a $0.1 million letter of credit issued for the benefit of the landlord of one of the Company’s leased facilities. The Company’s financial results for the six months ended December 31, 2020 and the nine months ended March 31, 2021 resulted in violations of one or more of the following financial covenants: (1) Maximum Total Leverage Ratio; (2) Minimum Debt Service Coverage Ratio; and (3) Minimum Consolidated EBITDA; as defined in the Company’s Credit Agreement. The Company entered into a Forbearance Agreement, providing a period commencing on April 9, 2021 and through and including June 15, 2021, during which the Company was able to borrow on its Revolver, subject to the terms and conditions to making a revolving credit advance, including availability, and the Lenders agreed, subject to the terms of the Forbearance Agreement, to forbear from enforcing their rights or seeking to collect payment of the Company’s debt or disposing of the collateral securing the debt. On June 14, 2021, the Company entered into the First Amendment to the Forbearance Agreement, which among other things, extended the forbearance period from June 15, 2021 to February 28, 2022 and waived the testing of the Maximum Total Leverage Ratio and Minimum Debt Service Coverage ratios for the duration of the Forbearance Period. The First Amendment also substituted Minimum Liquidity and Minimum Consolidated EBITDA requirements which would be tested monthly beginning with the month ending July 31, 2021. During the extended period, the Company was able to borrow under the revolving line of credit, subject to availability and satisfaction of certain other conditions. On September 21, 2021, the Company entered into the Second Amendment to Forbearance Agreement, which among other things, made changes to the calculations of financial covenants, contained revised requirements for Minimum Liquidity and Minimum Consolidated EBITDA, as defined, for the monthly periods through and including February 28, 2022, and revised the Revolving Credit Aggregate Commitment from $30 million to $27 million. On December 9, 2021, the Company entered into the Third Amendment to Forbearance Agreement. As previously reported, the Company was in violation of the required Minimum Consolidated EBITDA Covenant (as amended by the Second Amendment to the Forbearance Agreement) as of September 30, 2021. The Lenders in the Third Amendment to the Forbearance Agreement, among other things, agreed to forbear with respect to the Minimum Consolidated EBITDA covenant violation and to suspend the Minimum Consolidated EBITDA covenant during the remainder of the forbearance period. The Third Amendment includes a new covenant tested weekly on a rolling basis, beginning December 15, 2021, and required that the Company’s actual cumulative total cash disbursements for the period being tested to not exceed total cash disbursements projected by the Company for the same period by more than 15% at any time during the forbearance period. The Third Amendment also reduced the Revolving Credit Aggregate Commitment from $27 million to $25 million. As of December 31, 2021, the Company was in violation of the required minimum Liquidity covenant, as provided in the Second Amendment to the Forbearance Agreement, dated September 21, 2021. As a result, on February 4, 2022, the Company entered into the Fourth Amendment to Forbearance Agreement. The Lenders in the Fourth Amendment agreed to waive the minimum Liquidity covenant violation. The Company did have the required minimum liquidity by the conclusion of the first week of 2022. Between February 25, 2022, and September 9, 2022, the Company entered into six forbearance agreement amendments. Each of these amendments extended the Forbearance Period. The Fifth Amendment to Forbearance Agreement (entered into February 25, 2022) extended the Forbearance Period from February 28, 2022 to March 11, 2022. The Sixth Amendment to Forbearance Agreement (entered into March 11, 2022) extended the Forbearance Period from March 11, 2022 to May 30, 2022. The Seventh Amendment to Forbearance Agreement (entered into May 26, 2022) extended the Forbearance Period from May 30, 2022 to June 13, 2022. The Eighth Amendment to Forbearance Agreement (entered into June 13, 2022) extended the Forbearance Period from June 13, 2022 to July 14, 2022. The Ninth Amendment to Forbearance Agreement (entered into July 14, 2022) extended the Forbearance Period from July 14, 2022 to September 12, 2022. The Eighth Amendment to the Forbearance Agreement also provided for the termination of LIBOR based interest rates on borrowings under the Credit Agreement: (1) as of the effective date of the amendment, June 13, 2022, with respect to any advances under the Credit Agreement after the amendment’s effective date, and (2) the expiration of any then current LIBOR interest period applicable to then outstanding advances with a LIBOR based interest rate. The Eighth Amendment substituted SOFR for LIBOR. The amendment also defined “SOFR” as a rate equal to the secured overnight financing rate published on the website of the SOFR administrator or any successor source identified as such by the administrator. The Company does not expect this change in the basis for calculating the interest rate on its bank borrowings to have a material effect on its interest expense. On September 9, 2022, the Company entered into the Tenth Amendment to Forbearance Agreement, which extended the Forbearance Period from September 12, 2022 to October 24, 2022. The Tenth Amendment also requires the Company’s financial advisor to, among other things, deliver by September 30, 2022 a reasonably detailed projected timeline for completing a transaction to refinance the bank debt, identifying potential financing sources for a refinancing transaction, identifying potential strategic alternatives if the Company is unsuccessful at completing a refinancing transaction, and providing an assessment from the advisor of the likelihood of the Company’s ability to complete a refinancing transaction. The failure to do so would result in a Forbearance Termination Event. The Tenth Amendment also updates or implements several financial covenants including: an update to the cash disbursements covenant, the creation of a weekly minimum liquidity covenant, and the creation of a minimum sales covenant for August and September 2022. The Tenth Amendment also defines a new Forbearance Termination Event if the Company’s customers whose sales represent, in the aggregate, more than five (5%) of the Company’s net sales for the twelve (12) month period ended June 30, 2022 provide notice that such customers are resourcing business to a different supplier. On October 4, 2022, the Company entered into the Eleventh Amendment to Forbearance Agreement, which extended the Forbearance Period from October 24, 2022 to November 7, 2022. The Eleventh Amendment includes certain amendments to the Credit Agreement and permits the Company to raise up to $4 million of debt financing, which is further described in Note 18 . The Eleventh Amendment also amends several financial covenants including: an amendment to the weekly minimum liquidity covenant, an amendment to the minimum sales covenant for the two month period ending September 30, 2022 and an amendment to the weekly cash disbursement covenant. Debt Issuance Costs Debt issuance costs represent legal, consulting, and other financial costs associated with debt financing and are reported netted against the related debt instrument. Amounts paid to or on behalf of lenders are presented as a debt discount and are also shown as a reduction of the associated debt instrument. Debt issuance costs on term debt are amortized using the straight line basis over the term of the related debt (which is immaterially different from the required effective interest method) while those related to revolving debt are amortized using a straight line basis over the term of the related debt. At September 30, 2022 and December 31, 2021, unamortized debt issuance costs were $0.2 million and $0.2 million, respectively, while amounts paid to or on behalf of lenders presented as unamortized debt discounts were $0.1 million and $0.2 million, respectively. Amortization expense of both debt issuance costs and debt discounts has been recognized as a component of interest expense in the amounts of $0.1 million and $0.2 million for the three and nine months ended September 30, 2022, respectively, and $0.1 million and $0.2 million for the three and nine months ended September 30, 2021, respectively. Covenant Compliance The Amended and Restated Credit Agreement, as further amended and forbore by the Forbearance Agreement, as amended, contains the following financial covenants: Maximum Total Leverage Ratio The Total Leverage Ratio, as defined in the Credit Agreement, as amended, may not exceed (i) 3.75 to 1.00, with respect to the fiscal quarter ended as of September 30, 2020; (ii) 3.50 to 1.00, with respect to the fiscal quarter ended December 31, 2020; (iii) 3.25 to 1.00, with respect to the fiscal quarters ended March 31, 2021 and June 30, 2021; and (iv) 3.00 to 1.00, with respect to each fiscal quarter thereafter. For purposes of calculating the Total Leverage Ratio, “Consolidated EBITDA”, as defined, shall be determined (i) with respect to the fiscal quarter ended as of September 30, 2020, for the single fiscal quarter then ended, multiplied by 4,(ii) with respect to the fiscal quarter ended as of December 31, 2020, for the two fiscal quarters then ended, multiplied by 2, (iii) with respect to the fiscal quarter ended as of March 31, 2021, for the three fiscal quarters then ended, multiplied by 4/3, and (iv) with respect to each fiscal quarter thereafter, for the four fiscal quarters then ended. Also, for purposes of calculating the Total Leverage Ratio, the PPP Note was excluded from Total Debt for all periods until a determination of forgiveness was made. the PPP Note has been forgiven. Testing of the Total Leverage Ratio is suspended during the Forbearance Period. Minimum Debt Service Coverage Ratio The Debt Service Coverage Ratio may not be less than 1.20 to 1.00, to be measured, as of the end of each fiscal quarter. Notwithstanding anything to the contrary set forth in the definition of "Debt Service Coverage Ratio," such calculation shall be made (i) with respect to the fiscal quarter ended as of September 30 2020, for the single fiscal quarter then ended, (ii) with respect to the fiscal quarter ended as of December 31, 2020, for the two fiscal quarters then ended, (iii) with respect to the fiscal quarter ended as of March 31, 2021, for the three fiscal quarters then ended, and (iv) with respect to the last day of each fiscal quarter thereafter, for the four fiscal quarters then ended. Testing of the Minimum Debt Service Coverage Ratio is suspended during the Forbearance Period. Minimum Liquidity The Eleventh Amendment to the Forbearance Agreement established a financial covenant requiring the Company to maintain a Minimum Liquidity of $500,000 as of the Friday of each week while the Loans are outstanding. As of September 30, 2022, the Company maintained compliance with this financial covenant. Projected Cash Disbursements The Third Amendment to the Forbearance Agreement establishes a financial covenant limiting the Company’s cumulative total cash disbursements to an amount not exceeding the Company’s projected total cash disbursements for the same cumulative period by more than 15%. As of September 30, 2022, the Company was in compliance with this financial covenant. Monthly Sales The Eleventh Amendment to the Forbearance Agreement established a financial covenant requiring the Company’s sales for the two month period ending September 30, 2022 shall not be less than $23.7 million. As of September 30, 2022, the Company achieved compliance with this financial covenant. Future Maturities The Company is currently under a Forbearance Agreement, which currently expires November 7, 2022. The loan covenant defaults mentioned previously, if not waived by our lenders, allows the lenders to accelerate the maturity of the debt, making it immediately due and payable. Accordingly, all debt subject to the Credit Agreement has been classified as current as of September 30, 2022: Future Maturities (dollars in thousands) 2022 $ 48,006 Total 48,006 Discounts (113) Debt issuance costs (152) Total debt, net $ 47,741 |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments Interest Rate Swap The Company holds a derivative financial instrument, in the form of an interest rate swap, as required by its Credit Agreement, for the purpose of hedging certain identifiable transactions in order to mitigate risks relating to the variability of future earnings and cash flows caused by interest rate fluctuations. The Company has elected not to apply hedge accounting for financial reporting purposes. The interest rate swap is recognized in the accompanying condensed consolidated balance sheets at its fair value. Monthly settlement payments due on the interest rate swap and changes in its fair value are recognized currently in net income as interest expense in the accompanying condensed consolidated statements of operations. Effective November 30, 2018, as required under the Amended and Restated Credit Agreement, the Company entered into an interest rate swap that requires the Company to pay a fixed rate of 3.075% per annum while receiving a variable interest rate per annum based on the one month LIBOR for a net monthly settlement based on the notional amount in effect. The notional amount at the effective date was $5.0 million, which increased by $0.4 million each quarter until June 28, 2019 when the notional amount increased to $17.5 million due to an interest rate swap from 2016 expiring. Since June 28, 2019, the notional amount has decreased each quarter by $0.2 million until September 30, 2020 when the notional amount increased to $17.5 million due to an interest rate swap from 2017 expiring. The notional amount then decreased each quarter by $0.4 million until December 31, 2021, and will continue to decrease each quarter by $0.6 million until it expires on November 8, 2023. At September 30, 2022, the fair value of all swaps was in a net asset position of $0.2 million and is included in deposits and other assets in the condensed consolidated balance sheets. At December 31, 2021, the fair value of the swap was in a net liability position of $0.6 million and was included in other long term liabilities. The Company paid $31 thousand and $0.2 million in net monthly settlements with respect to the interest rate swaps for the three and nine months ended September 30, 2022, respectively. During the three and nine months ended September 30, 2021, the Company paid $0.1 million and $0.4 million, respectively, in net monthly settlements. Both the change in fair value and the net monthly settlements were included in interest expense in the condensed consolidated statements of operations. |
Stock Incentive Plans
Stock Incentive Plans | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Incentive Plans | Stock Incentive Plans 2013 Stock Incentive Plan The Company’s board of directors approved a stock incentive plan (the “Plan”) in 2013. The Plan permits the Company to grant 495,000 non statutory or incentive stock options to the employees, directors and consultants of the Company. 495,000 shares of unissued common stock are reserved for the Plan. The board of directors has the authority to determine the participants to whom stock options shall be awarded as well as any restrictions to be placed upon the awards. The exercise price cannot be less than the fair value of the underlying shares at the time the stock options are issued and the maximum length of an award is ten years. 2014 Omnibus Performance Award Plan In 2014, the board of directors and stockholders adopted the Unique Fabricating, Inc. 2014 Omnibus Performance Award Plan, or the 2014 Plan. The 2014 Plan provides for the grant of cash awards, stock options, stock appreciation rights, or SARs, shares of restricted stock and restricted stock units, or RSUs, performance shares and performance units. The 2014 Plan originally authorized the grant of awards relating to 250,000 shares of our common stock. In the event of any transaction that causes a change in capitalization, the compensation committee, such other committee administering the 2014 Plan or the board of directors will make such adjustments to the number of shares of common stock delivered, and the number and/or price of shares of common stock subject to outstanding awards granted under the 2014 Plan, as it deems appropriate and equitable to prevent dilution or enlargement of participants’ rights. An amendment approved in March of 2016 by our board of directors which was approved by our stockholders at our annual meeting of stockholders in June 2016, increased the number of shares authorized for grant of awards under the 2014 Plan to a total of 450,000 shares of our common stock. In July 2020, an additional amendment was approved by our board of directors at our annual meeting of stockholders, which increased the number of shares authorized for grant of awards under the 2014 Plan to a total of 700,000 shares of our common stock. The fair value of each of the option awards is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following tables. The expected volatility is based on the historical volatility of the stock of comparable companies. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options for adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant. A summary of option activity under both plans is presented below: Number of Weighted Weighted Average Remaining Aggregate Intrinsic Value (1) (dollars in thousands, except share data and exercise price) Outstanding at December 31, 2021 846,731 $ 4.00 7.6 $ — Granted — $ — 0 $ — Exercised — $ — 0 $ — Forfeited or expired 149,982 $ 4.87 0 $ — Outstanding at September 30, 2022 696,749 $ 3.80 7.2 $ — Vested and exercisable at September 30, 2022 341,783 $ 4.48 6.8 $ — ———————————— (1) The aggregate intrinsic value above is obtained by subtracting the exercise price from the estimated fair value of the underlying shares and multiplying this result by the related number of options outstanding and exercisable as of the period end date. There is no intrinsic value if the exercise price exceeds the fair value of the underlying shares. The estimated fair value of the shares is based on the closing price of the stock of $0.52 as of September 30, 2022 and $1.96 as of December 31, 2021. The Company recorded stock-based compensation expense of $42 thousand and $125 thousand for the three and nine months ended September 30, 2022, respectively, and $49 thousand and $332 thousand for the three and nine months ended September 30, 2021, respectively. Stock compensation expense is included in the condensed consolidated statements of operations, as a component of selling, general, and administrative expenses. The income tax (expense) benefit related to share based compensation expense was immaterial for all periods presented. As of September 30, 2022, there was $492 thousand of total unrecognized compensation cost related to non-vested stock option awards under the plans. That cost is expected to be recognized over a weighted average period of 3.2 years. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For interim tax reporting we estimate our annual effective tax rate and apply it to our year to date income before income taxes. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effect of changes in tax laws or rates, are reported in the interim period in which they occur, if applicable. As of the period ended September 30, 2022, the Company has recorded a Valuation Allowance on deferred tax assets in Mexico and Canada and maintained the valuation allowance on deferred tax assets in the U.S. Income tax expense for the three and nine months ended September 30, 2022, was $3.7 million and $2.5 million, respectively, compared to an income tax benefit of $0.5 million and an expense of $0.2 million for the three and nine months ended September 30, 2021, respectively. During the three and nine months ended September 30, 2022, the effective tax rates were (54)% and (13)%, respectively. The differences between the effective tax rates and the statutory rate of 21% were primarily related to the valuation allowances in the U.S., Canada and Mexico. |
Lease
Lease | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Lease | Lease The Company records a right-of-use (“ROU”) asset and lease liability for substantially all leases for which it is a lessee, in accordance with ASC 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has no significant lease agreements in place for which the Company is a lessor. At inception of a contract, the Company considers all relevant facts and circumstances to assess whether or not the contract represents a lease by determining whether or not the contract conveys the right to control the use of an identified asset, either explicit or implicit, for a period of time in exchange for consideration. The Company leases certain industrial spaces, office space, land, and equipment. Some leases include one or more options to renew, with renewal terms that can extend the lease term from generally one depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. New leased assets obtained in exchange for new operating lease liabilities during the three months ended September 30, 2022 were immaterial. Leased assets and liabilities included within the condensed consolidated balance sheets consist of the following: Classification September 30, 2022 (dollars in thousands) Right-of-Use-Assets Operating Operating leases $ 10,068 Liabilities Current Operating Other accrued liabilities $ 1,753 Non-current Operating Other liabilities 8,830 Total lease liabilities $ 10,583 Lease costs included in the condensed consolidated statements of operations consist of the following: Classification Nine Months Ended September 30, 2022 (dollars in thousands) Lease cost Cost of sales, selling expenses and general and administrative expense $ 2,006 Maturities of the Company’s lease liabilities as of September 30, 2022 are as follows: Lease Liability Maturities (dollars in thousands) 2022 (remainder) $ 836 2023 2,297 2024 2,200 2025 2,053 2026 1,589 Thereafter 4,225 Total lease payments 13,200 Less: interest 2,617 Present value of lease payments $ 10,583 As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Remaining lease term and discount rates are as follows: September 30, 2022 Weighted average remaining lease term (years) 6.3 Weighted average discount rate 6.4 % Lease costs included in the condensed consolidated statements of cash flows are as follows: Nine Months Ended September 30, 2022 (dollars in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows from operating leases $ 2,134 |
Retirement Plans
Retirement Plans | 9 Months Ended |
Sep. 30, 2022 | |
Retirement Benefits [Abstract] | |
Retirement Plans | Retirement PlansThe Company maintains a defined contribution plan covering certain full time salaried employees. Employees can make elective contributions to the plan. The Company contributes a match on 100% of an employee’s contribution up to the first 3% of each employee’s total compensation and 50% for the next 2% of each employee’s total compensation. In addition, the Company, at the discretion of the board of directors, may make additional contributions to the plan on behalf of the plan participants. The Company contributed $0.1 million and $0.3 million for the three and nine months ended September 30, 2022, respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2021, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Effective March 18, 2013, the Company is a party to a management agreement with a firm related to several stockholders. The agreement initially provided for annual management fees of $300 thousand and additional fees for assistance provided with acquisitions. Effective upon completion of the Company's initial public offering, the agreement was amended to reduce the annual management fee by an amount equal to the amount, if any, of annual cash retainers and equity awards received as compensation for service on the board of directors to any person who is a related person of Taglich Private Equity, LLC or Taglich Brothers, Inc (“Taglich”). The Company incurred management fees of $56 thousand for the three months ended March 31, 2021, however, the Forbearance Agreement suspended any further management fee payments until the expiration of the Forbearance Period. The management agreement had an initial term of five years, expiring on March 18, 2020, and renews automatically annually for additional one year terms. The current term expires on March 18, 2023. The agreement also will terminate on the date that the Taglich Founding Investors or Taglich Equity Investors, each as defined, no longer also collectively own 50% of the equity securities owned by either of them on March 18, 2013. Beginning in February 2021, the Company began utilizing the services of Engauge Workforce Solutions LLC (“Engauge”), a manufacturing and distribution staffing agency. Ms. Kim Korth, a member of the Company’s Board of Directors, is also the Managing Director of Engauge. In March 2021, the Company entered into an agreement with Engauge for its services. The agreement is for an initial term of 12 months and will continue on a month-to-month basis after the initial term. The Company may terminate the agreement, without penalty, following the initial term with 60 days written notice. The Company has incurred fees for Engauge’s services for the nine months ended September 30, 2022 of $864 thousand. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial instruments consist of cash equivalents, accounts receivable, accounts payable and debt. The carrying amount of all significant financial instruments approximates fair value due to either the short maturity or the existence of variable interest rates that approximate prevailing market rates. Accounting standards require certain other items be reported at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value. Fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. Level 2 inputs may include quoted prices for similar items in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related item. Level 3 fair value measurements are based primarily on management’s own estimates using inputs such as pricing models, discounted cash flow methodologies or similar techniques taking into account the characteristics of the item. In instances whereby inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each item. The Company measures its interest rate swaps at fair value on a recurring basis based primarily on Level 2 inputs using an income model based on disparity between variable and fixed interest rates, the scheduled balance of principal outstanding, yield curves and other information readily available in the market. Please refer to Note 8 for more information on the Company’s interest rate swap. The Company performed a valuation analysis for its Revolver and Term debt as of September 30, 2022. The analysis used Level 2 inputs including, among other things, the sum of the risk-free rate and a default spread to arrive at an estimated cost of debt of 18.2%. The estimated cost of debt was then used as the discount rate to determine the present value of the debt payments. As of September 30, 2022, the fair value of the Company’s debt approximates 90% of book value. The Company assesses goodwill for impairment on at least an annual basis, and more frequently whenever events or changes in circumstances indicate a potential impairment. The goodwill impairment analysis is based on Level 3 inputs, including forecasted EBITDA margins and future cash flows. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing the net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed giving effect to all potentially weighted average dilutive shares including stock options and warrants. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by application of the treasury stock method. The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted loss per share: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (dollars in thousands, except per share amounts) Numerator: Net loss $ (10,552) $ (1,856) $ (21,832) $ (5,434) Denominator: Weighted average shares outstanding, basic 11,733,147 9,970,299 11,733,147 9,843,565 Dilutive effect of stock-based awards — — — — Weighted average share outstanding, diluted 11,733,147 9,970,299 11,733,147 9,843,565 Basic loss per share $ (0.90) $ (0.19) $ (1.86) $ (0.55) Diluted loss per share $ (0.90) $ (0.19) $ (1.86) $ (0.55) The effect of certain common stock equivalents were excluded from the computation of weighted average diluted shares outstanding for the three and nine months ended September 30, 2022 and September 30, 2021, as inclusion would have resulted in anti-dilution. A summary of these anti-dilutive common stock equivalents is provided in the table below: Nine Months Ended September 30, 2022 2021 Number of options 696,749 905,069 Exercise price of options $2.08 - $12.50 $2.36 - $12.58 Warrants (1) 156,320 156,320 Exercise price of warrants $3.12 $3.12 _________________________________ |
Employee Retention Credit
Employee Retention Credit | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Employee Retention Credit | Employee Retention Credit The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) included, among other things, an employee retention credit (the “ERC”) which is a refundable tax credit against certain employment taxes. The periods for which the ERC benefit can be claimed has been expanded since the CARES Act of 2020. The Relief Act of 2021 and the American Rescue Plan Act of 2021 extended the period for which the ERC could be claimed for eligible wages from January 1, 2021 to January 1, 2022. However, the Infrastructure Investment and Jobs Act amended the eligible period to end on October 1, 2021. These three Acts made it possible for the Company to claim the ERC benefit if certain financial and headcount requirements were met. A company qualifies for the ERC for quarters that experience a significant decline in gross receipts, which is defined as quarterly gross receipts less than 80 percent of gross receipts for the same period in 2019. The ERC is available for qualified wages (including certain health plan expenses) of up to $10,000 per employee per quarter. During the nine months ended September 30, 2022, the Company recorded an ERC of $3.0 million, of which, $2.5 million and $0.5 million was recorded within cost of sales and selling, general, and administrative expenses, respectively, on the Company’s condensed consolidated statements of operations. During the nine months ended September 30, 2021, the Company recognized an ERC benefit of $0.3 million, all of which was recorded in cost of sales. The ERC benefit is presented as prepaid expenses on the Company’s condensed consolidated balance sheets. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | ContingenciesThe Company is engaged from time to time in legal matters and proceedings arising out of its normal course of business. The Company establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company has incurred a liability and the related amount can be reasonably estimated. If the Company determines that an obligation is reasonably possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. While uncertainties are inherent in the final outcome of such matters, the Company believes that there are no pending proceedings in which the Company is currently involved that will have a material effect on its financial position, results of operations or cash flow. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Events Debt Financing The Company completed an offering of $4 million aggregate principal amount in notes, in two series, bearing pay-in-kind interest at the rate of 12% per annum on October 7, 2022. Investors in the notes also received warrants for up to an aggregate of 120,000 shares at an exercise price of $0.52 per share, the closing sales price of the Company’s common stock on the date of the closing of the first tranche of the notes offering on October 4, 2022. Investors will receive warrants to purchase in the aggregate an additional 280,000 shares if the notes are not repaid within 12 months. Interest on the notes through the end of 2022 will be convertible at the holders’ option into common stock at a price equal to the warrant exercise price. The notes are secured by and will be paid from the expected receipt of the Company’s Employee Retention Credits and any proceeds from the sale of a non-operational financial asset; one series in the aggregate principal amount of $2,500,000 has a first priority security interest in the financial asset, and a series in the aggregate principal amount of $1,500,000 has a first priority security interest the Company’s Employee Retention Credit. The terms of the two series are otherwise identical. The proceeds of this financing have been used to: reduce by $750,000 the outstanding principal amount of the Company’s bank term loans; $1,228,125 to prepay the December 31, 2022, term loan principal payment; and to reduce by $2,021,875 outstanding borrowings under the Company’s revolving line of credit, which amount remains available to be reborrowed, subject to the Credit Agreement. Taglich Brothers, Inc. served as placement agent for the offering of notes and will receive 192,308 shares of the Company’s common stock as a placement fee. An investor also received 38,461 shares of the Company’s common stock. The notes, warrants, shares of common stock issuable upon exercise of the warrants and the shares issued to the placement agent and to an affiliate of an investor are not being registered under the Securities Act of 1933, as amended (the “Securities Act”) and were offered pursuant to the exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) thereof and Rule 506(b) under Regulation D promulgated under such Act. Waiver and Ninth Amendment to Credit Agreement On November 7, 2022, the Company entered into the Waiver and Ninth Amendment to Credit Agreement (“Ninth Amendment”). As of December 31, 2020, and March 31, 2021, the Company was in violation of certain of its financial covenants (the “Specified Defaults”), as defined in the Credit Agreement. As of September 30, 2021, the Company was also in violation of the required Minimum Consolidated EBITDA covenant, as amended by the Second Amendment to the Forbearance Agreement dated September 21, 2021 (the “Specified Forbearance Termination Event”). The Lenders in the Ninth Amendment, among other things, agreed to grant a permanent waiver of the Specified Defaults and the Specified Forbearance Termination Event that have occurred prior to the effectiveness of the Ninth Amendment and of any right the Lenders may have to exercise any of their rights against the Company as a result. The Ninth Amendment also requires that the Company repay the outstanding principal balance of the Loans under the Credit Agreement and all accrued and unpaid interest thereon on or before February 3, 2023 (subject to extension to not later than February 28, 2023 if the Company complies with certain conditions (the “Repayment Date” )). The Company also is required to deliver to the Lenders by December 9, 2022, non-binding indications of interest from one or more potential counterparties to one or more refinancing transactions which aggregate sufficient net proceeds to result in repayment in full of the Loans and other Indebtedness on or before the Repayment Date (the “Refinancing Transaction”). The Company is further required to deliver by January 16, 2023, at least one fully executed term sheet with respect to a Refinancing Transaction with a counterparty that satisfies certain qualifications specified in the Ninth Amendment. If the Company fails to meet these milestone dates or repay the Loans or other Indebtedness in full on or before the Repayment Date it will constitute an event of default under the Credit Agreement. The Company also is required to cause its Mexican subsidiary to grant as security for repayment of the Loans, by December 8, 2022, a first priority lien, subject only to permitted liens, enforceable under Mexican law in such subsidiary’s accounts receivables. |
Nature of Business and Basis _2
Nature of Business and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying condensed consolidated financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company, its results of operations, and its cash flows. The interim results for the periods presented may not be indicative of the Company's actual annual results. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Going Concern The Company’s condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of December 31, 2020 and March 31, 2021, the Company was in violation of its financial covenants, as defined in the Company’s Credit Agreement ( Note 7 ). The Company entered into a forbearance agreement, dated April 9, 2021, which allowed the Company to be able to borrow on its revolving line of credit, subject to the terms and conditions to making a revolving credit advance, including availability, and the lenders agreed, subject to the terms of the forbearance agreement, as amended, to forbear from enforcing their rights or seeking to collect payment of the Company’s debt or disposing of the collateral securing the debt. As of September 30, 2021, the Company was also in violation of the required Minimum Consolidated EBITDA covenant (as amended by the Second Amendment to the Forbearance Agreement dated September 21, 2021). On December 9, 2021, the Company entered into the Third Amendment to Forbearance Agreement with respect to the Amended and Restated Credit Agreement, as amended. The Lenders in the Third Amendment to the Forbearance Agreement, among other things, agreed to forbear with respect to the Minimum Consolidated EBITDA covenant violation, as of September 30, 2021, and to suspend compliance with the Minimum Consolidated EBITDA covenant during the remainder of the forbearance period. The Third Amendment included a new covenant that began on December 15, 2021, which is tested weekly on a rolling basis and requires that the Company’s actual cumulative total cash disbursements for the period being tested not exceed total cash disbursements projected by the Company for the same period by more than 15% at any time during the forbearance period. The Third Amendment also reduced the Revolving Credit Aggregate Commitment from $27 million to $25 million. As of December 31, 2021, the Company was in violation of the required Minimum Liquidity covenant, as provided in the Second Amendment to the Forbearance Agreement. As a result, on February 4, 2022, the Company entered into the Fourth Amendment to Forbearance Agreement. The Lenders in the Fourth Amendment to the Forbearance Agreement agreed to waive the Minimum Liquidity covenant violation. Between February 25, 2022, and September 9, 2022, the Company entered into six forbearance agreement amendments. Each of these amendments extended the Forbearance Period. The Fifth Amendment to Forbearance Agreement (entered into February 25, 2022) extended the Forbearance Period from February 28, 2022 to March 11, 2022. The Sixth Amendment to Forbearance Agreement (entered into March 11, 2022) extended the Forbearance Period from March 11, 2022 to May 30, 2022. The Seventh Amendment to Forbearance Agreement (entered into May 26, 2022) extended the Forbearance Period from May 30, 2022 to June 13, 2022. The Eighth Amendment to Forbearance Agreement (entered into June 13, 2022) extended the Forbearance Period from June 13, 2022 to July 14, 2022. The Ninth Amendment to Forbearance Agreement (entered into July 14, 2022) extended the Forbearance Period from July 14, 2022 to September 12, 2022. The Tenth Amendment to Forbearance Agreement (entered into September 9, 2022) extended the Forbearance Period from September 12, 2022 to October 24, 2022. On October 4, 2022, the Company entered into the Eleventh Amendment to Forbearance Agreement, which extended the Forbearance Period from October 24, 2022 to November 7, 2022. The Eleventh Amendment includes certain amendments to the Credit Agreement and permits the Company to raise up to $4 million of debt financing, which is further described in Note 18 . The Eleventh Amendment also amends several financial covenants including: an amendment to the weekly Minimum Liquidity covenant, an amendment to the minimum sales covenant for the two month period ending September 30, 2022 and an amendment to the weekly cash disbursement covenant. The defaults, if not waived by our lenders, allows the lenders to accelerate the maturity of the debt, making it immediately due and payable. Accordingly, all debt subject to the Credit Agreement, currently totaling $47.7 million, has been classified as current as of September 30, 2022. The Company does not have sufficient cash and cash equivalents on hand or available liquidity to repay such debt or meet its obligations thereunder as they become due through twelve months from date of issuance of these condensed consolidated financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company has engaged a financial adviser and has initiated a process to obtain financing to repay the existing bank borrowings and fund operational needs. There can be no assurance that the Company will be able to obtain such financing or if it were to obtain financing as to its terms. In addition, if the Company were not able to obtain financing, there can be no assurance that current bank lenders will consent to an amendment or waiver to cure existing defaults or that they will not take other action. In response to these conditions, the Company is discussing with its bank lenders entering into an amendment and waiver to cure the covenant defaults. There is not any assurance that the lenders will waive such non compliance or agree to an amendment to the current provisions. Even if the lenders were to agree to waive the failures to comply as of December 31, 2020, March 31, 2021, and September 30, 2021, there cannot be any assurance that, at any future date at which compliance is measured, we will be able to comply with the covenants contained in the Credit Agreement, as amended, given the industry-wide and other challenges that we face, as described elsewhere herein, or that our lenders would waive a default if that were to occur. Furthermore, there can be no assurance that the Company will be able to enter into an amendment or waiver with the lenders or if it enters into an amendment, what the terms, restrictions, and covenants of the amendment will contain. These plans have not been finalized and are not within the Company’s control, and therefore cannot be deemed probable. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. |
New Accounting Pronouncements | In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses,” which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. In November 2019, the FASB issued ASU 2019-10, which established the effective date of the new standard for smaller reporting companies as fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact, if any, the adoption of the new credit losses model will have on its financial statements. In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform”. The ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or any other reference rate expected to be discontinued. In January 2021, the FASB issued ASU 2021-01 - Reference Rate Reform (Topic 848). The amendments in this ASU clarify that certain option expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, it will be in effect for a limited time through December 31, 2022. |
Revenue Recognition | Revenue is recognized by the Company once all performance obligations under the terms of a contract with a Company's customer is satisfied. Generally this occurs with the transfer of control to a customer of its transportation, appliance, and other products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products. The Company’s payment terms vary by the type and location of its customers and the products offered. The term between invoicing and when payment is due is not significant. In general for sales arrangements, the Company deems control to transfer at a single point in time and recognizes revenue when it ships products from its manufacturing facilities to its customers. Once a product has shipped, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The Company considers control to transfer upon shipment because the Company has a present right to payment at that time, the customer has legal title to the asset, and the customer has significant risks and rewards of ownership of the asset. Contract Balances |
Fair Value Measurement | Financial instruments consist of cash equivalents, accounts receivable, accounts payable and debt. The carrying amount of all significant financial instruments approximates fair value due to either the short maturity or the existence of variable interest rates that approximate prevailing market rates. Accounting standards require certain other items be reported at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value. Fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. Level 2 inputs may include quoted prices for similar items in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related item. Level 3 fair value measurements are based primarily on management’s own estimates using inputs such as pricing models, discounted cash flow methodologies or similar techniques taking into account the characteristics of the item. In instances whereby inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each item. The Company measures its interest rate swaps at fair value on a recurring basis based primarily on Level 2 inputs using an income model based on disparity between variable and fixed interest rates, the scheduled balance of principal outstanding, yield curves and other information readily available in the market. Please refer to Note 8 for more information on the Company’s interest rate swap. The Company performed a valuation analysis for its Revolver and Term debt as of September 30, 2022. The analysis used Level 2 inputs including, among other things, the sum of the risk-free rate and a default spread to arrive at an estimated cost of debt of 18.2%. The estimated cost of debt was then used as the discount rate to determine the present value of the debt payments. As of September 30, 2022, the fair value of the Company’s debt approximates 90% of book value. The Company assesses goodwill for impairment on at least an annual basis, and more frequently whenever events or changes in circumstances indicate a potential impairment. The goodwill impairment analysis is based on Level 3 inputs, including forecasted EBITDA margins and future cash flows. |
Nature of Business and Basis _3
Nature of Business and Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Concentration of Risk | The following table presents the Company's sales directly to General Motors Company (“GM”), Yanfeng Automotive Interiors, Stellantis N.V. (formerly Fiat Chrysler Automobiles), and Ford Motor Company (“Ford”) as a percentage of total net sales: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 General Motors Company 9 % 5 % 9 % 7 % Yanfeng Automotive Interiors 7 % 10 % 8 % 8 % Stellantis N.V. 7 % 8 % 8 % 7 % Ford Motor Company 4 % 3 % 4 % 4 % Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Mexico 27 % 23 % 25 % 24 % Canada 8 % 8 % 8 % 9 % The following table presents the percentage of the Company's total net sales represented by net sales from operations located in Mexico and Canada: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Mexico 27 % 24 % 26 % 25 % Canada 7 % 8 % 8 % 9 % |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table presents the Company's net sales disaggregated by major sales channel: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (dollars in thousands) Net Sales Transportation $ 30,789 $ 26,124 $ 93,457 $ 84,741 Appliance 3,109 3,104 9,388 9,247 Other 605 681 2,002 1,615 Total $ 34,503 $ 29,909 $ 104,847 $ 95,603 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories consist of the following: September 30, 2022 December 31, 2021 (dollars in thousands) Raw materials $ 8,608 $ 9,242 Work in progress 1,243 990 Finished goods 2,670 3,538 Total inventory $ 12,521 $ 13,770 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant, and equipment, net consists of the following: September 30, 2022 December 31, 2021 Depreciable (dollars in thousands) Land $ 538 $ 538 Buildings 7,630 7,630 23 – 40 Shop equipment 28,015 26,049 7 – 10 Leasehold improvements 1,344 1,283 3 – 10 Office equipment 3,102 3,047 3 – 7 Mobile equipment 50 50 3 Construction in progress 442 1,554 Total cost 41,121 40,151 Less: Accumulated depreciation 20,059 17,584 Net property, plant, and equipment, net $ 21,062 $ 22,567 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill are as follows: (dollars in thousands) Balance at December 31, 2021 Goodwill $ 28,871 Accumulated impairment losses (11,875) Net beginning balance 16,996 Second quarter impairment (12,163) Balance at June 30, 2022 4,833 Third quarter impairment (4,833) Balance at September 30, 2022 $ — |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | The Company’s long-term debt consists of the following: September 30, 2022 December 31, 2021 (dollars in thousands) US Term Loan, payable to lenders in quarterly installments of $0.8 million through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 7.0% and 5.5% per annum at September 30, 2022 and December 31, 2021, respectively. At September 30, 2022, the balance of the US Term Loan is presented net of a debt discount of $79 thousand from costs paid to or on behalf of the lenders. $ 18,082 $ 20,383 CA Term Loan, payable to lenders in quarterly installments of $0.4 million through November 7, 2023, with a lump sum due at maturity. The effective interest rate was 7.0% and 5.5% per annum at September 30, 2022 and December 31, 2021, respectively. At September 30, 2022, the balance of the CA Term Loan is presented net of a debt discount of $34 thousand from costs paid to or on behalf of the lenders. 6,369 7,437 Capital expenditure line payable to lenders in quarterly installments of 12.5% per annum through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 7.0% and 5.5% per annum at September 30, 2022 and December 31, 2021, respectively. 947 1,064 Total debt excluding Revolver $ 25,398 $ 28,884 |
Schedule of Maturities of Long-Term Debt | Accordingly, all debt subject to the Credit Agreement has been classified as current as of September 30, 2022: Future Maturities (dollars in thousands) 2022 $ 48,006 Total 48,006 Discounts (113) Debt issuance costs (152) Total debt, net $ 47,741 |
Stock Incentive Plans (Tables)
Stock Incentive Plans (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Options and Stock Appreciation Rights Award Activity | A summary of option activity under both plans is presented below: Number of Weighted Weighted Average Remaining Aggregate Intrinsic Value (1) (dollars in thousands, except share data and exercise price) Outstanding at December 31, 2021 846,731 $ 4.00 7.6 $ — Granted — $ — 0 $ — Exercised — $ — 0 $ — Forfeited or expired 149,982 $ 4.87 0 $ — Outstanding at September 30, 2022 696,749 $ 3.80 7.2 $ — Vested and exercisable at September 30, 2022 341,783 $ 4.48 6.8 $ — ———————————— |
Lease (Tables)
Lease (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule of Balance Sheet and Weighted-Average Lease Information | Leased assets and liabilities included within the condensed consolidated balance sheets consist of the following: Classification September 30, 2022 (dollars in thousands) Right-of-Use-Assets Operating Operating leases $ 10,068 Liabilities Current Operating Other accrued liabilities $ 1,753 Non-current Operating Other liabilities 8,830 Total lease liabilities $ 10,583 September 30, 2022 Weighted average remaining lease term (years) 6.3 Weighted average discount rate 6.4 % |
Schedule of Lease Cost Information | Lease costs included in the condensed consolidated statements of operations consist of the following: Classification Nine Months Ended September 30, 2022 (dollars in thousands) Lease cost Cost of sales, selling expenses and general and administrative expense $ 2,006 Lease costs included in the condensed consolidated statements of cash flows are as follows: Nine Months Ended September 30, 2022 (dollars in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows from operating leases $ 2,134 |
Schedule of Lease Maturity | Maturities of the Company’s lease liabilities as of September 30, 2022 are as follows: Lease Liability Maturities (dollars in thousands) 2022 (remainder) $ 836 2023 2,297 2024 2,200 2025 2,053 2026 1,589 Thereafter 4,225 Total lease payments 13,200 Less: interest 2,617 Present value of lease payments $ 10,583 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted loss per share: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (dollars in thousands, except per share amounts) Numerator: Net loss $ (10,552) $ (1,856) $ (21,832) $ (5,434) Denominator: Weighted average shares outstanding, basic 11,733,147 9,970,299 11,733,147 9,843,565 Dilutive effect of stock-based awards — — — — Weighted average share outstanding, diluted 11,733,147 9,970,299 11,733,147 9,843,565 Basic loss per share $ (0.90) $ (0.19) $ (1.86) $ (0.55) Diluted loss per share $ (0.90) $ (0.19) $ (1.86) $ (0.55) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings per Share | A summary of these anti-dilutive common stock equivalents is provided in the table below: Nine Months Ended September 30, 2022 2021 Number of options 696,749 905,069 Exercise price of options $2.08 - $12.50 $2.36 - $12.58 Warrants (1) 156,320 156,320 Exercise price of warrants $3.12 $3.12 _________________________________ |
Nature of Business and Basis _4
Nature of Business and Basis of Presentation - Additional Information (Details) | 4 Months Ended | 9 Months Ended | ||||||
Nov. 07, 2022 USD ($) | Dec. 09, 2021 USD ($) | Jun. 13, 2022 agreement | Sep. 30, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 08, 2021 USD ($) | Sep. 21, 2021 USD ($) | Sep. 20, 2021 USD ($) | |
Concentration Risk [Line Items] | ||||||||
Number of reportable segments | segment | 1 | |||||||
Revolver, current maturities | $ 22,343,000 | $ 19,541,000 | ||||||
Subsequent Event | ||||||||
Concentration Risk [Line Items] | ||||||||
Debt instrument, covenant, maximum debt financing | $ 4,000,000 | |||||||
Labor Force Concentration Risk | Workforce Subject to Collective Bargaining Arrangements | Collective Bargaining Arrangements Expiring August 2022 | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (percentage) | 28% | |||||||
Labor Force Concentration Risk | Workforce Subject to Collective Bargaining Arrangements | Collective Bargaining Arrangements Expiring February 2023 | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (percentage) | 10% | |||||||
Labor Force Concentration Risk | Workforce Subject to Collective Bargaining Arrangements | United States | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (percentage) | 51% | |||||||
Labor Force Concentration Risk | Workforce Subject to Collective Bargaining Arrangements | Mexico | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (percentage) | 45% | |||||||
Labor Force Concentration Risk | Workforce Subject to Collective Bargaining Arrangements | Canada | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (percentage) | 4% | |||||||
Revolving credit facility | Line of Credit | ||||||||
Concentration Risk [Line Items] | ||||||||
Maximum borrowing capacity | $ 25,000,000 | $ 27,000,000 | $ 27,000,000 | $ 30,000,000 | ||||
Number of forbearance agreements | agreement | 6 | |||||||
Forbearance Agreement | Line of Credit | ||||||||
Concentration Risk [Line Items] | ||||||||
Total cash disbursements | 15% | |||||||
Credit agreement | ||||||||
Concentration Risk [Line Items] | ||||||||
Revolver, current maturities | $ 47,700,000 |
Nature of Business and Basis _5
Nature of Business and Basis of Presentation - Customers' Net Sales as a Percentage of Total Net Sales (Details) - Sales Revenue, Net - Customer Concentration Risk | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
General Motors Company | ||||
Product Information [Line Items] | ||||
Concentration risk (percentage) | 9% | 5% | 9% | 7% |
Yanfeng Automotive Interiors | ||||
Product Information [Line Items] | ||||
Concentration risk (percentage) | 7% | 10% | 8% | 8% |
Stellantis N.V. | ||||
Product Information [Line Items] | ||||
Concentration risk (percentage) | 7% | 8% | 8% | 7% |
Ford Motor Company | ||||
Product Information [Line Items] | ||||
Concentration risk (percentage) | 4% | 3% | 4% | 4% |
Nature of Business and Basis _6
Nature of Business and Basis of Presentation - Production in Foreign Markets (Details) - Geographic Concentration Risk | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Mexico | Cost of Goods and Service Benchmark | ||||
Product Information [Line Items] | ||||
Concentration risk (percentage) | 27% | 23% | 25% | 24% |
Mexico | Sales Revenue, Net | ||||
Product Information [Line Items] | ||||
Concentration risk (percentage) | 27% | 24% | 26% | 25% |
Canada | Cost of Goods and Service Benchmark | ||||
Product Information [Line Items] | ||||
Concentration risk (percentage) | 8% | 8% | 8% | 9% |
Canada | Sales Revenue, Net | ||||
Product Information [Line Items] | ||||
Concentration risk (percentage) | 7% | 8% | 8% | 9% |
Revenues (Details)
Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total sales | $ 34,503 | $ 29,909 | $ 104,847 | $ 95,603 |
Transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Total sales | 30,789 | 26,124 | 93,457 | 84,741 |
Appliance | ||||
Disaggregation of Revenue [Line Items] | ||||
Total sales | 3,109 | 3,104 | 9,388 | 9,247 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total sales | $ 605 | $ 681 | $ 2,002 | $ 1,615 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 8,608 | $ 9,242 |
Work in progress | 1,243 | 990 |
Finished goods | 2,670 | 3,538 |
Total inventory | $ 12,521 | $ 13,770 |
Inventory - Additional Informat
Inventory - Additional Information (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory [Line Items] | ||
Allowance for obsolete inventory | $ 1,000 | $ 1,200 |
Inventory, net | 12,521 | 13,770 |
Mexico | ||
Inventory [Line Items] | ||
Inventory, net | 3,800 | 4,000 |
Canada | ||
Inventory [Line Items] | ||
Inventory, net | $ 1,300 | $ 1,100 |
Property, Plant, and Equipmen_3
Property, Plant, and Equipment, Net - Schedule of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 41,121 | $ 40,151 |
Less: Accumulated depreciation | 20,059 | 17,584 |
Net property, plant, and equipment, net | 21,062 | 22,567 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 538 | 538 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 7,630 | 7,630 |
Buildings | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable Life – Years | 23 years | |
Buildings | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable Life – Years | 40 years | |
Shop equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 28,015 | 26,049 |
Shop equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable Life – Years | 7 years | |
Shop equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable Life – Years | 10 years | |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 1,344 | 1,283 |
Leasehold improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable Life – Years | 3 years | |
Leasehold improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable Life – Years | 10 years | |
Office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 3,102 | 3,047 |
Office equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable Life – Years | 3 years | |
Office equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable Life – Years | 7 years | |
Mobile equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 50 | 50 |
Depreciable Life – Years | 3 years | |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 442 | $ 1,554 |
Property, Plant, and Equipmen_4
Property, Plant, and Equipment, Net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||||
Depreciation expense | $ 800 | $ 800 | $ 2,500 | $ 2,300 | |
Property, plant, and equipment, net | 21,062 | 21,062 | $ 22,567 | ||
Mexico | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant, and equipment, net | 3,400 | 3,400 | 3,500 | ||
Canada | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant, and equipment, net | $ 300 | $ 300 | $ 400 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Goodwill [Roll Forward] | |||||||
Goodwill | $ 28,871 | ||||||
Accumulated impairment losses | (11,875) | ||||||
Goodwill, beginning balance | $ 4,833 | $ 16,996 | $ 16,996 | ||||
Impairment | (4,833) | $ (12,200) | $ (5,115) | (12,163) | (16,996) | $ (5,115) | |
Goodwill, ending balance | 0 | 4,833 | 4,833 | 0 | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Accumulated impairment losses | 11,875 | ||||||
Impairment | 4,833 | 12,200 | $ 5,115 | 12,163 | 16,996 | $ 5,115 | |
Goodwill | $ 0 | $ 4,833 | $ 4,833 | $ 0 | $ 16,996 | ||
Discounted Cash Flow | Discount Rate | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Goodwill fair value measurement assumptions (percent) | 0.199 | 0.186 | 0.186 | 0.199 | |||
Discounted Cash Flow | Terminal Growth Rate | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Goodwill fair value measurement assumptions (percent) | 0.030 | 0.03 | 0.03 | 0.030 | |||
Discounted Cash Flow | EBITDA Margin | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Goodwill fair value measurement assumptions (percent) | 0.108 | 0.108 | 0.108 | 0.108 |
Long-term Debt - Schedule of Lo
Long-term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||
Effective interest rate | 18.20% | |
Debt discount | $ 113 | $ 200 |
Outstanding principal amount | $ 25,398 | $ 28,884 |
Line of Credit | New US Term Loan | Secured Debt | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 7% | 5.50% |
Debt discount | $ 79 | |
Outstanding principal amount | 18,082 | $ 20,383 |
Line of Credit | New US Term Loan | Secured Debt | October 1, 2021 Through November 7, 2023 | ||
Debt Instrument [Line Items] | ||
Principal payment | $ 800 | |
Line of Credit | CA term loan | Secured Debt | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 7% | 5.50% |
Debt discount | $ 34 | |
Outstanding principal amount | 6,369 | $ 7,437 |
Line of Credit | CA term loan | Secured Debt | October 1, 2021 Through November 7, 2023 | ||
Debt Instrument [Line Items] | ||
Principal payment | $ 400 | |
Line of Credit | Capital expenditure line | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 7% | 5.50% |
Outstanding principal amount | $ 947 | $ 1,064 |
Line of Credit | Capital expenditure line | October 1, 2021 Through November 7, 2023 | ||
Debt Instrument [Line Items] | ||
Percent of principal payment | 12.50% |
Long-term Debt - Additional Inf
Long-term Debt - Additional Information (Details) | 3 Months Ended | 4 Months Ended | 9 Months Ended | |||||||||||
Nov. 07, 2022 USD ($) | Sep. 09, 2022 | Dec. 09, 2021 USD ($) | Nov. 08, 2018 USD ($) | Apr. 29, 2016 | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Jun. 13, 2022 agreement | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Dec. 08, 2021 USD ($) | Sep. 21, 2021 USD ($) | Sep. 20, 2021 USD ($) | |
Debt Instrument [Line Items] | ||||||||||||||
Fair value of debt as a percentage of carrying value (percent) | 90% | 90% | 90% | |||||||||||
Outstanding principal amount | $ 25,398,000 | $ 25,398,000 | $ 28,884,000 | |||||||||||
Effective interest rate | 18.20% | 18.20% | ||||||||||||
Debt instrument net sales percentage | 5% | |||||||||||||
Debt issuance cost | $ 200,000 | $ 200,000 | 200,000 | |||||||||||
Unamortized discount | 113,000 | 113,000 | 200,000 | |||||||||||
Amortization expense of debt issuance costs | $ 100,000 | $ 100,000 | 200,000 | $ 200,000 | ||||||||||
Company maintain minimum liquidity | 500,000 | |||||||||||||
Debt instrument, covenant, minimum two-month sales | $ 23,700,000 | |||||||||||||
Subsequent Event | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, covenant, maximum debt financing | $ 4,000,000 | |||||||||||||
Amended and Restated Credit Agreement | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Minimum debt service coverage ratio | 1.20 | 1.20 | ||||||||||||
Amended and Restated Credit Agreement | Fiscal Quarter Ending September 30, 2020 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, total covenant, leverage ratio | 3.75 | 3.75 | ||||||||||||
Debt instrument, covenant, multiplier | 400% | |||||||||||||
Amended and Restated Credit Agreement | Fiscal Quarter Ending December 31, 2020 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, total covenant, leverage ratio | 3.50 | 3.50 | ||||||||||||
Debt instrument, covenant, multiplier | 200% | |||||||||||||
Amended and Restated Credit Agreement | Fiscal Quarter Ending March 31, 2021 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, total covenant, leverage ratio | 3.25 | 3.25 | ||||||||||||
Debt instrument, covenant, multiplier | 133.30% | |||||||||||||
Amended and Restated Credit Agreement | Fiscal Quarter Ending June 30, 2021 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, total covenant, leverage ratio | 3.25 | 3.25 | ||||||||||||
Amended and Restated Credit Agreement | Fiscal Quarter Thereafter | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, total covenant, leverage ratio | 3 | 3 | ||||||||||||
Forbearance Agreement | Trailing 12 Months | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Limit to the excess above projected total cash disbursements (percent) | 15% | 15% | ||||||||||||
Forbearance Agreement | Line of Credit | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Total cash disbursements | 15% | |||||||||||||
Line of Credit | Amended and Restated Credit Agreement | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 73,000,000 | |||||||||||||
Line of Credit | Amended and Restated Credit Agreement | Secured Debt | Minimum | Base Rate | PPP under CARES Act | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 2% | |||||||||||||
Line of Credit | Amended and Restated Credit Agreement | Secured Debt | Minimum | LIBOR | PPP under CARES Act | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 1% | |||||||||||||
Line of Credit | Amended and Restated Credit Agreement | US Borrower and CA Borrower | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, term | 5 years | |||||||||||||
Debt instrument, term to fund capital expenditures | 2 years | |||||||||||||
Line of Credit | Amended and Restated Credit Agreement | US Borrower and CA Borrower | Revolving credit facility | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 30,000,000 | |||||||||||||
Line of Credit | US Term loan | US Borrower and CA Borrower | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum increase to principal amount | 26,000,000 | |||||||||||||
Line of Credit | CA term loan | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Outstanding principal amount | $ 6,369,000 | $ 6,369,000 | $ 7,437,000 | |||||||||||
Effective interest rate | 7% | 7% | 5.50% | |||||||||||
Unamortized discount | $ 34,000 | $ 34,000 | ||||||||||||
Line of Credit | CA term loan | US Borrower and CA Borrower | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Outstanding principal amount | $ 12,000,000 | |||||||||||||
Line of Credit | Credit agreement | Secured Debt | Minimum | Base Rate | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 1.75% | |||||||||||||
Line of Credit | Credit agreement | Secured Debt | Minimum | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 2.75% | |||||||||||||
Line of Credit | Credit agreement | Secured Debt | Maximum | Base Rate | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 3.25% | |||||||||||||
Line of Credit | Credit agreement | Secured Debt | Maximum | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 4.25% | |||||||||||||
Line of Credit | First Amendment To Forbearance Agreement | Secured Debt | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 4.50% | 4.25% | ||||||||||||
Line of Credit | Forbearance Agreement | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Paid-in-kind percentage | 0.50% | 0.50% | ||||||||||||
Revolving credit facility | Line of Credit | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 25,000,000 | $ 27,000,000 | $ 27,000,000 | $ 30,000,000 | ||||||||||
Number of forbearance agreements | agreement | 6 | |||||||||||||
Revolving credit facility | New Revolver | Line of Credit | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Line of credit | $ 22,500,000 | $ 22,500,000 | ||||||||||||
Effective interest rate | 7% | 7% | ||||||||||||
Remaining borrowing capacity | $ 1,300,000 | $ 1,300,000 | ||||||||||||
Capital expenditure line | Amended and Restated Credit Agreement | US Borrower and CA Borrower | November 8, 2018 Through November 8, 2019 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 2,500,000 | |||||||||||||
Capital expenditure line | Amended and Restated Credit Agreement | US Borrower and CA Borrower | November 9, 2019 Through November 8, 2020 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 5,000,000 | |||||||||||||
Letter of credit | New Revolver | Line of Credit | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Letters of credit outstanding, amount | $ 100,000 | $ 100,000 |
Long-term Debt - Schedule of Re
Long-term Debt - Schedule of Repayment of Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
2022 | $ 48,006 | |
Total | 48,006 | |
Discounts | (113) | $ (200) |
Debt issuance costs | (152) | |
Total debt, net | $ 47,741 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Details) - Interest Rate Swap - Not Designated as Hedging Instrument - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Nov. 30, 2018 | |
Derivatives, Fair Value [Line Items] | ||||||
Fixed interest rate | 3.075% | |||||
Notional amount | $ 5,000,000 | |||||
Derivative net liability | $ 200,000 | $ 200,000 | $ 600,000 | |||
Interest Expense | ||||||
Derivatives, Fair Value [Line Items] | ||||||
Monthly settlement payments (receipts) | $ 31,000 | $ 100,000 | $ 200,000 | $ 400,000 | ||
Derivative Instrument, Periodic Payment, Installment Periods Through June Twenty Eight Two Thousand Nineteen | ||||||
Derivatives, Fair Value [Line Items] | ||||||
Notional amount | 17,500,000 | |||||
Quarterly increase in notional amount | 400,000 | |||||
Derivative Instrument, Periodic Payment, Installment Periods Until September Thirty Two Thousand Twenty | ||||||
Derivatives, Fair Value [Line Items] | ||||||
Notional amount | 17,500,000 | |||||
Quarterly decrease in notional amount | 200,000 | |||||
Derivative Instrument, Periodic Payment, Installment Periods Until November Eighth Twenty Twenty Three | ||||||
Derivatives, Fair Value [Line Items] | ||||||
Quarterly decrease in notional amount | 600,000 | |||||
Derivative Instrument, Periodic Payment, Installment Periods Until December 31, 2021 | ||||||
Derivatives, Fair Value [Line Items] | ||||||
Quarterly decrease in notional amount | $ 400,000 |
Stock Incentive Plans - Additio
Stock Incentive Plans - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Sep. 30, 2021 | Jun. 29, 2014 | Sep. 30, 2022 | Sep. 30, 2021 | Jul. 31, 2020 | Jun. 30, 2016 | Jan. 04, 2015 | Dec. 29, 2013 | |
Selling, General and Administrative Expenses | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Allocated share-based compensation expense | $ 42 | $ 49 | $ 125 | $ 332 | |||||
Employee Stock Option | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Unrecognized compensation cost | $ 492 | $ 492 | |||||||
Compensation cost, weighted average period | 3 years 2 months 12 days | ||||||||
The 2013 Stock Incentive Plan | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Number of shares reserved for future issuance (in shares) | 495,000 | ||||||||
The 2013 Stock Incentive Plan | Employee Stock Option | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Number of shares available for grant (in shares) | 495,000 | ||||||||
Expiration period | 10 years | ||||||||
2014 Omnibus Performance Award Plan | |||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||||||
Number of shares authorized (in shares) | 700,000 | 450,000 | 250,000 |
Stock Incentive Plans - Schedul
Stock Incentive Plans - Schedule of Stock Options and Stock Awards (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Number of Shares | ||
Outstanding at end of period (in shares) | 696,749 | |
Aggregate Intrinsic Value | ||
Granted | $ 0 | |
Exercised | $ 0 | |
Share price (in dollars per share) | $ 0.52 | $ 1.96 |
The Plan and the 2014 Plan | ||
Number of Shares | ||
Outstanding at beginning of period (in shares) | 846,731 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Forfeited or expired (in shares) | 149,982 | |
Outstanding at end of period (in shares) | 696,749 | 846,731 |
Vested and exercisable (in shares) | 341,783 | |
Weighted Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 4 | |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 0 | |
Forfeited or expired (in dollars per share) | 4.87 | |
Outstanding at end of period (in dollars per share) | 3.80 | $ 4 |
Vested and exercisable (in dollars per share) | $ 4.48 | |
Weighted Average Remaining Contractual Term (in years) | ||
Outstanding weighted average remaining contractual term | 7 years 2 months 12 days | 7 years 7 months 6 days |
Granted | 0 years | |
Exercised | 0 years | |
Forfeited or expired | 0 years | |
Vested and exercisable | 6 years 9 months 18 days | |
Aggregate Intrinsic Value | ||
Outstanding, beginning of period | $ 0 | |
Forfeited or expired | 0 | |
Outstanding, at end of period | 0 | $ 0 |
Vested and exercisable at end of period | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 3,722 | $ (522) | $ 2,514 | $ 216 |
Actual effective rate (percent) | (54.00%) | (13.00%) |
Lease - Additional Information
Lease - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2022 option | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Leases, Number Of Renewal Options | 1 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 5 years |
Lease - Balance Sheet Informati
Lease - Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Right-of-Use-Assets | ||
Operating leases | $ 10,068 | $ 9,776 |
Liabilities | ||
Operating lease, liability, current | $ 1,753 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other accrued liabilities | |
Operating lease, liability, non-current | $ 8,830 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other liabilities | |
Total lease liabilities | $ 10,583 |
Lease - Lease Cost (Details)
Lease - Lease Cost (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Leases [Abstract] | |
Cost of sales, selling expenses and general and administrative expense | $ 2,006 |
Lease - Schedule of Lease Liabi
Lease - Schedule of Lease Liabilities Maturity (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Leases [Abstract] | |
2022 (remainder) | $ 836 |
2023 | 2,297 |
2024 | 2,200 |
2025 | 2,053 |
2026 | 1,589 |
Thereafter | 4,225 |
Total lease payments | 13,200 |
Less: interest | 2,617 |
Present value of lease payments | $ 10,583 |
Lease - Weighted-Average Lease
Lease - Weighted-Average Lease Information (Details) | Sep. 30, 2022 |
Leases [Abstract] | |
Weighted average remaining lease term (years) | 6 years 3 months 18 days |
Weighted average discount rate | 6.40% |
Lease - Cash Outflow Informatio
Lease - Cash Outflow Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Leases [Abstract] | |
Operating cash outflows from operating leases | $ 2,134 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer contribution amount | $ 0.1 | $ 0.1 | $ 0.3 | $ 0.3 |
Defined contribution plan, initial contribution | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer matching contribution, percent | 100% | |||
Employer matching contribution, percent of employees gross pay | 3% | |||
Defined contribution plan, additional contribution | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer matching contribution, percent | 50% | |||
Employer matching contribution, percent of employees gross pay | 2% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 18, 2013 | Mar. 31, 2021 | Sep. 30, 2022 | |
Affiliated Entity | Management Agreement | |||
Related Party Transaction [Line Items] | |||
Annual management fees | $ 300 | ||
Expenses from agreement | $ 56 | ||
Management agreement, term | 5 years | ||
Additional renewal period term | 1 year | ||
Equity ownership needed to terminate agreement | 50% | ||
Engauge Workforce Solutions LLC ("Engauge") | |||
Related Party Transaction [Line Items] | |||
Expenses from agreement | $ 864 | ||
Agreement term | 12 months | ||
Written notice term | 60 days |
Fair Value Measurements (Detail
Fair Value Measurements (Details) | Sep. 30, 2022 |
Fair Value Disclosures [Abstract] | |
Effective interest rate | 18.20% |
Earnings Per Share - Numerator
Earnings Per Share - Numerator and Denominator of Basic and Diluted Loss per Share Reconciliation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||||||
Net loss | $ (10,552) | $ (10,711) | $ (569) | $ (1,856) | $ (2,509) | $ (1,069) | $ (21,832) | $ (5,434) |
Denominator: | ||||||||
Weighted average shares outstanding, basic (in shares) | 11,733,147 | 9,970,299 | 11,733,147 | 9,843,565 | ||||
Dilutive effect of stock-based awards (in shares) | 0 | 0 | 0 | 0 | ||||
Weighted average shares outstanding, diluted (in shares) | 11,733,147 | 9,970,299 | 11,733,147 | 9,843,565 | ||||
Net Earning Per Share [Abstract] | ||||||||
Basic loss per share (in dollars per share) | $ (0.90) | $ (0.19) | $ (1.86) | $ (0.55) | ||||
Diluted loss per share (in dollars per share) | $ (0.90) | $ (0.19) | $ (1.86) | $ (0.55) |
Earnings Per Share - Anti-Dilut
Earnings Per Share - Anti-Dilutive Common Stock Equivalents Summary (Details) - $ / shares | 1 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of options (in shares) | 905,069 | 696,749 | 905,069 |
Exercise price of options lower limit (in dollars per share) | $ 2.08 | $ 2.36 | |
Exercise price of options upper limit (in dollars per share) | $ 12.50 | $ 12.58 | |
Warrants (in shares) | 156,320 | 156,320 | |
Exercise price of warrants lower limit (in dollars per share) | $ 3.12 | $ 3.12 | $ 3.12 |
Warrants for Underwriters | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of EPS (in shares) | 156,320 |
Employee Retention Credit (Deta
Employee Retention Credit (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Percentage limit on gross receipts for employee retention credit claim (percent) | 80% | ||
Maximum wages for employee retention credit eligibility per employee | $ 10 | ||
Employee Retention Credit | $ 3,000 | $ 300 | |
Cost of Sales | |||
Employee Retention Credit | 2,500 | ||
Selling, General and Administrative Expenses | |||
Employee Retention Credit | $ 500 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) | Dec. 31, 2022 | Oct. 04, 2022 | Oct. 07, 2022 | Sep. 30, 2022 | Sep. 30, 2021 |
Subsequent Event [Line Items] | |||||
Exercise price of warrants lower limit (in dollars per share) | $ 3.12 | $ 3.12 | |||
Subsequent Event | Taglich Brothers | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, placement fee, shares received | 192,308 | ||||
Subsequent Event | Affiliate Of Investor | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, placement fee, shares received | 38,461 | ||||
Subsequent Event | First Tranche Of Notes Offering | |||||
Subsequent Event [Line Items] | |||||
Class of warrant or right, number of securities called by warrants or rights | 120,000 | ||||
Exercise price of warrants lower limit (in dollars per share) | $ 0.52 | ||||
Subsequent Event | Second Tranche Of Notes Offering | |||||
Subsequent Event [Line Items] | |||||
Class of warrant or right, number of securities called by warrants or rights | 280,000 | ||||
Subsequent Event | Amended and Restated Credit Agreement | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Principal payment term loan | $ 2,021,875 | ||||
Subsequent Event | Notes Payable, Other Payables | |||||
Subsequent Event [Line Items] | |||||
Effective interest rate | 12% | ||||
Subsequent Event | Notes Payable, Other Payables | Notes Offering | |||||
Subsequent Event [Line Items] | |||||
Aggregate principal amount | $ 4,000,000 | ||||
Subsequent Event | Notes Payable, Other Payables | Notes Offering, Series One | |||||
Subsequent Event [Line Items] | |||||
Aggregate principal amount | $ 2,500,000 | ||||
Subsequent Event | Notes Payable, Other Payables | Notes Offering, Series Two | |||||
Subsequent Event [Line Items] | |||||
Aggregate principal amount | 1,500,000 | ||||
Subsequent Event | Secured Debt | Bank Term Loans | |||||
Subsequent Event [Line Items] | |||||
Debt lnstrument outstanding principal amount | $ 750,000 | ||||
Subsequent Event | Term Loan | December 2022 Term Loan | |||||
Subsequent Event [Line Items] | |||||
Repayments of other long-term debt | $ 1,228,125 |