Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 04, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2020 | |
Entity File Number | 0-04041 | |
Entity Registrant Name | ALLIED MOTION TECHNOLOGIES INC | |
Entity Incorporation, State or Country Code | CO | |
Entity Tax Identification Number | 84-0518115 | |
Entity Address, Address Line One | 495 Commerce Drive | |
Entity Address, City or Town | Amherst | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 14228 | |
City Area Code | 716 | |
Local Phone Number | 242-8634 | |
Title of 12(b) Security | Common stock | |
Trading Symbol | AMOT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,757,694 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000046129 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 20,227 | $ 13,416 |
Trade receivables, net of provision for credit losses of $580 and allowance for doubtful accounts of $405 at September 30, 2020 and December 31, 2019, respectively | 51,265 | 44,429 |
Inventories | 61,643 | 53,385 |
Prepaid expenses and other assets | 6,620 | 4,413 |
Total current assets | 139,755 | 115,643 |
Property, plant and equipment, net | 54,058 | 53,008 |
Deferred income taxes | 895 | 490 |
Intangible assets, net | 66,366 | 62,497 |
Goodwill | 60,460 | 52,935 |
Right of use assets | 18,115 | 16,420 |
Other long-term assets | 4,202 | 4,835 |
Total Assets | 343,851 | 305,828 |
Current liabilities: | ||
Accounts payable | 29,312 | 23,640 |
Accrued liabilities | 22,821 | 23,001 |
Total current liabilities | 52,133 | 46,641 |
Long-term debt | 124,387 | 109,765 |
Deferred income taxes | 4,721 | 3,399 |
Pension and post-retirement obligations | 5,229 | 5,139 |
Right of use liabilities | 14,643 | 13,715 |
Other long-term liabilities | 8,346 | 7,975 |
Total liabilities | 209,459 | 186,634 |
Stockholders' Equity: | ||
Common stock, no par value, authorized 50,000 shares; 9,757 and 9,599 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 40,674 | 37,136 |
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding | ||
Retained earnings | 102,659 | 92,589 |
Accumulated other comprehensive loss | (8,941) | (10,531) |
Total stockholders' equity | 134,392 | 119,194 |
Total Liabilities and Stockholders' Equity | $ 343,851 | $ 305,828 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Trade receivables, allowance for doubtful accounts (in dollars) | $ 405 | |
Trade receivables, provision for credit losses | $ 580 | |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized shares | 50,000 | 50,000 |
Common stock, shares issued | 9,757 | 9,599 |
Common stock, shares outstanding | 9,757 | 9,599 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized shares | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||
Revenues | $ 94,653 | $ 96,633 | $ 273,696 | $ 283,159 |
Cost of goods sold | 66,513 | 66,603 | 191,054 | 197,045 |
Gross profit | 28,140 | 30,030 | 82,642 | 86,114 |
Operating costs and expenses: | ||||
Selling | 3,734 | 4,144 | 11,819 | 12,373 |
General and administrative | 10,008 | 9,932 | 28,880 | 28,451 |
Engineering and development | 6,434 | 5,705 | 18,865 | 17,188 |
Business development | 8 | 8 | 432 | 64 |
Amortization of intangible assets | 1,499 | 1,429 | 4,423 | 4,291 |
Total operating costs and expenses | 21,683 | 21,218 | 64,419 | 62,367 |
Operating income | 6,457 | 8,812 | 18,223 | 23,747 |
Other expense: | ||||
Interest expense | 844 | 1,359 | 2,799 | 3,974 |
Other expense, net | 231 | 140 | 307 | 121 |
Total other expense, net | 1,075 | 1,499 | 3,106 | 4,095 |
Income before income taxes | 5,382 | 7,313 | 15,117 | 19,652 |
Provision for income taxes | (1,369) | (2,695) | (4,173) | (6,119) |
Net income | $ 4,013 | $ 4,618 | $ 10,944 | $ 13,533 |
Basic earnings per share: | ||||
Earnings per share (in dollars per share) | $ 0.42 | $ 0.49 | $ 1.15 | $ 1.44 |
Basic weighted average common shares (in shares) | 9,514 | 9,414 | 9,487 | 9,390 |
Diluted earnings per share: | ||||
Earnings per share (in dollars per share) | $ 0.42 | $ 0.49 | $ 1.15 | $ 1.43 |
Diluted weighted average common shares (in shares) | 9,579 | 9,464 | 9,539 | 9,435 |
Net income | $ 4,013 | $ 4,618 | $ 10,944 | $ 13,533 |
Other comprehensive income: | ||||
Foreign currency translation adjustment | 3,433 | (2,369) | 2,937 | (2,708) |
Gain (loss) on derivatives | 70 | (105) | (1,347) | (803) |
Comprehensive income | $ 7,516 | $ 2,144 | $ 12,534 | $ 10,022 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock and Paid-in Capital | Common Stock | Unamortized Cost of Equity Awards | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balances at Dec. 31, 2018 | $ 33,613 | $ 36,779 | $ (3,166) | $ 76,718 | $ (8,518) | $ 101,813 |
Balances (in shares) at Dec. 31, 2018 | 9,485 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock transactions under employee benefit stock plans | 1,088 | $ 1,088 | 1,088 | |||
Stock transactions under employee benefit stock plans (in shares) | 27 | |||||
Issuance of restricted stock, net of forfeitures | 330 | $ 4,059 | (3,729) | 330 | ||
Issuance of restricted stock, net of forfeitures (in shares) | 96 | |||||
Stock compensation expense | 596 | 596 | 596 | |||
Shares withheld for payment of employee payroll taxes | (63) | $ (63) | (63) | |||
Shares withheld for payment of employee payroll taxes (in shares) | (1) | |||||
Foreign currency translation adjustment | (887) | (887) | ||||
Accumulated income (loss) on derivatives | (343) | (343) | ||||
Tax effect of derivative transactions | 81 | 81 | ||||
Net income | 4,470 | 4,470 | ||||
Dividends to stockholders | (287) | (287) | ||||
Balances at Mar. 31, 2019 | 35,564 | $ 41,863 | (6,299) | 80,901 | (9,667) | 106,798 |
Balances (in shares) at Mar. 31, 2019 | 9,607 | |||||
Balances at Dec. 31, 2018 | 33,613 | $ 36,779 | (3,166) | 76,718 | (8,518) | 101,813 |
Balances (in shares) at Dec. 31, 2018 | 9,485 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Foreign currency translation adjustment | (2,708) | |||||
Net income | 13,533 | |||||
Balances at Sep. 30, 2019 | 36,437 | $ 41,632 | (5,195) | 89,388 | (12,029) | 113,796 |
Balances (in shares) at Sep. 30, 2019 | 9,600 | |||||
Balances at Mar. 31, 2019 | 35,564 | $ 41,863 | (6,299) | 80,901 | (9,667) | 106,798 |
Balances (in shares) at Mar. 31, 2019 | 9,607 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of restricted stock, net of forfeitures | $ 416 | (416) | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 11 | |||||
Stock compensation expense | 780 | 780 | 780 | |||
Shares withheld for payment of employee payroll taxes | (647) | $ (647) | (647) | |||
Shares withheld for payment of employee payroll taxes (in shares) | (18) | |||||
Foreign currency translation adjustment | 548 | 548 | ||||
Accumulated income (loss) on derivatives | (564) | (564) | ||||
Tax effect of derivative transactions | 128 | 128 | ||||
Net income | 4,445 | 4,445 | ||||
Dividends to stockholders | (288) | (288) | ||||
Balances at Jun. 30, 2019 | 35,697 | $ 41,632 | (5,935) | 85,058 | (9,555) | 111,200 |
Balances (in shares) at Jun. 30, 2019 | 9,600 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock compensation expense | 740 | 740 | 740 | |||
Foreign currency translation adjustment | (2,369) | (2,369) | ||||
Accumulated income (loss) on derivatives | (135) | (135) | ||||
Tax effect of derivative transactions | 30 | 30 | ||||
Net income | 4,618 | 4,618 | ||||
Dividends to stockholders | (288) | (288) | ||||
Balances at Sep. 30, 2019 | 36,437 | $ 41,632 | (5,195) | 89,388 | (12,029) | 113,796 |
Balances (in shares) at Sep. 30, 2019 | 9,600 | |||||
Balances at Dec. 31, 2019 | 37,136 | $ 41,642 | (4,506) | 92,589 | (10,531) | $ 119,194 |
Balances (in shares) at Dec. 31, 2019 | 9,599 | 9,599 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock transactions under employee benefit stock plans | 1,252 | $ 1,252 | $ 1,252 | |||
Stock transactions under employee benefit stock plans (in shares) | 32 | |||||
Issuance of restricted stock, net of forfeitures | 485 | $ 3,574 | (3,089) | 485 | ||
Issuance of restricted stock, net of forfeitures (in shares) | 104 | |||||
Stock compensation expense | 789 | 789 | 789 | |||
Shares withheld for payment of employee payroll taxes | (256) | $ (256) | (256) | |||
Shares withheld for payment of employee payroll taxes (in shares) | (24) | |||||
Foreign currency translation adjustment | (2,428) | (2,428) | ||||
Accumulated income (loss) on derivatives | (1,432) | (1,432) | ||||
Tax effect of derivative transactions | 344 | 344 | ||||
Net income | 4,035 | 4,035 | ||||
Dividends to stockholders | (290) | (290) | ||||
Balances at Mar. 31, 2020 | 39,406 | $ 46,212 | (6,806) | 96,334 | (14,047) | 121,693 |
Balances (in shares) at Mar. 31, 2020 | 9,711 | |||||
Balances at Dec. 31, 2019 | 37,136 | $ 41,642 | (4,506) | 92,589 | (10,531) | $ 119,194 |
Balances (in shares) at Dec. 31, 2019 | 9,599 | 9,599 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Foreign currency translation adjustment | $ 2,937 | |||||
Net income | 10,944 | |||||
Balances at Sep. 30, 2020 | 40,674 | $ 47,431 | (6,757) | 102,659 | (8,941) | $ 134,392 |
Balances (in shares) at Sep. 30, 2020 | 9,757 | 9,757 | ||||
Balances at Mar. 31, 2020 | 39,406 | $ 46,212 | (6,806) | 96,334 | (14,047) | $ 121,693 |
Balances (in shares) at Mar. 31, 2020 | 9,711 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of restricted stock, net of forfeitures | $ 1,222 | (1,222) | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 38 | |||||
Stock compensation expense | 921 | 921 | 921 | |||
Shares withheld for payment of employee payroll taxes | (541) | $ (541) | (541) | |||
Shares withheld for payment of employee payroll taxes (in shares) | (5) | |||||
Foreign currency translation adjustment | 1,932 | 1,932 | ||||
Accumulated income (loss) on derivatives | (433) | (433) | ||||
Tax effect of derivative transactions | 104 | 104 | ||||
Net income | 2,896 | 2,896 | ||||
Dividends to stockholders | (292) | (292) | ||||
Balances at Jun. 30, 2020 | 39,786 | $ 46,893 | (7,107) | 98,938 | (12,444) | 126,280 |
Balances (in shares) at Jun. 30, 2020 | 9,744 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of restricted stock, net of forfeitures | $ 555 | (555) | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 14 | |||||
Stock compensation expense | 905 | 905 | 905 | |||
Shares withheld for payment of employee payroll taxes | (17) | $ (17) | (17) | |||
Shares withheld for payment of employee payroll taxes (in shares) | (1) | |||||
Foreign currency translation adjustment | 3,433 | 3,433 | ||||
Accumulated income (loss) on derivatives | 91 | 91 | ||||
Tax effect of derivative transactions | (21) | (21) | ||||
Net income | 4,013 | 4,013 | ||||
Dividends to stockholders | (292) | (292) | ||||
Balances at Sep. 30, 2020 | $ 40,674 | $ 47,431 | $ (6,757) | $ 102,659 | $ (8,941) | $ 134,392 |
Balances (in shares) at Sep. 30, 2020 | 9,757 | 9,757 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Dividends declared (in dollars per share) | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flows From Operating Activities: | ||
Net income | $ 10,944 | $ 13,533 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 11,682 | 11,071 |
Deferred income taxes | (931) | (563) |
Stock based compensation expense | 2,640 | 2,374 |
Debt issue cost amortization recorded in interest expense | 109 | 131 |
Other | 360 | 581 |
Changes in operating assets and liabilities, net of acquisition: | ||
Trade receivables | (2,136) | (13,643) |
Inventories | (4,575) | 1,664 |
Prepaid expenses and other assets | (725) | (232) |
Accounts payable | 492 | (727) |
Accrued liabilities | (2,840) | 2,815 |
Net cash provided by operating activities | 15,020 | 17,004 |
Cash Flows From Investing Activities: | ||
Purchase of property and equipment | (6,560) | (9,280) |
Cash paid for acquisitions, net of cash acquired | (14,728) | |
Net cash used in investing activities | (21,288) | (9,280) |
Cash Flows From Financing Activities: | ||
Borrowings on long term debt | 26,979 | 9,091 |
Principal payments of long-term debt | (12,299) | (15,000) |
Payment of debt issuance costs | (401) | |
Dividends paid to stockholders | (875) | (887) |
Stock transactions under employee benefit stock plans | (814) | (717) |
Net cash provided by (used in) financing activities | 12,590 | (7,513) |
Effect of foreign exchange rate changes on cash | 489 | (306) |
Net increase (decrease) in cash and cash equivalents | 6,811 | (95) |
Cash and cash equivalents at beginning of period | 13,416 | 8,673 |
Cash and cash equivalents at end of period | $ 20,227 | $ 8,578 |
BASIS OF PREPARATION AND PRESEN
BASIS OF PREPARATION AND PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
BASIS OF PREPARATION AND PRESENTATION | |
BASIS OF PREPARATION AND PRESENTATION | 1. BASIS OF PREPARATION AND PRESENTATION Allied Motion Technologies Inc. (“Allied Motion” or the “Company”) is engaged in the business of designing, manufacturing and selling controlled motion solutions, which include integrated system solutions as well as individual controlled motion products, to a broad spectrum of customers throughout the world. The Company’s target markets include Vehicle, Medical, Aerospace & Defense and Industrial. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between the foreign subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in accumulated other comprehensive loss, a component of stockholders’ equity in the accompanying condensed consolidated statements of stockholders’ equity. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each of the foreign subsidiaries are included in the results of operations as incurred. The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and include all adjustments which are, in the opinion of management, necessary for a fair presentation. Certain information and footnote disclosures normally included in financial statements which are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures herein are adequate to make the information presented not misleading. The financial data for the interim periods may not necessarily be indicative of results to be expected for the year. The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the Consolidated Financial Statements and related Notes to such statements included in the Annual Report on Form 10-K for the year ended December 31, 2019 that was previously filed by the Company. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2020 | |
ACQUISITIONS | |
ACQUISITIONS | 2. ACQUISITIONS Dynamic Controls On March 7, 2020, the Company acquired 100% of the issued and outstanding share capital of the Dynamic Controls Group (“Dynamic Controls”), a wholly owned subsidiary of Invacare Corporation, a market-leading designer and manufacturer of equipment for the medical mobility and rehabilitation markets. The purchase price was funded using borrowings under the Amended Revolving Facility (Note 10). The purchase price was subject to adjustments based on a determination of closing net working capital. Dynamic Controls brings strong leadership and a very experienced electronics and software engineering design team, providing market leading electronic control solutions and products that will further strengthen the Company’s medical market position, as well as enable it to further develop higher level solutions with embedded electronics across our other major served markets. The Company incurred $8 and $432 of transaction costs related to the acquisition of Dynamic Controls in the three and nine months ended September 30, 2020, which are included in business development expenses on the condensed consolidated statements of income and comprehensive income. The Company accounted for the acquisition pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations . The preliminary allocation of the purchase price paid for Dynamic Controls is based on estimated fair values of the assets acquired and liabilities assumed of Dynamic Controls as of March 7, 2020 is as follows (in thousands): Cash and cash equivalents $ 11,437 Accounts receivable 4,129 Inventory 3,329 Other assets, net 769 Property, plant and equipment 1,185 Right of use assets 2,735 Intangible assets 7,800 Goodwill 6,629 Current liabilities (7,354) Lease liabilities (2,739) Net deferred income tax liabilities (1,755) Net purchase price $ 26,165 During the three months ended September 30, 2020, measurement period adjustments related primarily to tax liabilities were recognized, which resulted in an increase of goodwill by $77. The allocation of the purchase price is not yet finalized as the valuation of both the tangible and identifiable intangible assets and liabilities continue to be evaluated. The intangible assets acquired consist of customer lists of $4,400, technology of $1,900 and a trade name of $1,500, which are being amortized over 16 , 13 and 18 years , respectively. Goodwill generated in the acquisition is related to the assembled workforce, synergies between Allied Motion’s other operations and Dynamic Controls that are expected to occur as a result of the combined engineering knowledge, the ability of each of the operations to integrate each other’s products into more fully integrated system solutions and Allied Motion’s ability to utilize Dynamic Controls’ management knowledge in providing complementary product offerings to the Company’s customers. The operating results of this acquisition are included in our condensed consolidated financial statements beginning on the date of the acquisition. Included within the condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2020, revenues related to Dynamic Controls were $6,418 and $18,833 respectively, and earnings related to the operations of Dynamic Controls were $(62) and $1,110 respectively. The following unaudited pro forma financial information presents the combined results of operations if the Dynamic Controls acquisition had occurred as of January 1, 2019 (in thousands): Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Revenues $ 94,653 $ 104,277 $ 278,858 $ 306,191 Net income $ 3,976 $ 4,805 $ 11,569 $ 12,762 Earnings per share - basic $ 0.42 $ 0.51 $ 1.22 $ 1.36 Earnings per share - diluted $ 0.42 $ 0.51 $ 1.21 $ 1.35 The pro forma information includes certain adjustments, including depreciation and amortization expense, interest expense, and certain other adjustments, together with related income tax effects. The pro forma amounts do not reflect adjustments for anticipated operating efficiencies that the Company expects to achieve as a result of this acquisition. The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would have been had these transactions actually occurred on the date presented or to project the combined company’s results of operations or financial position for any future period. The goodwill resulting from the Dynamic Controls acquisition is not tax deductible. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 30, 2020 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION Performance Obligations Performance Obligations Satisfied at a Point in Time The Company considers control of most products to transfer at a single point in time, generally when the products are shipped in accordance with an agreement and/or purchase order. Control is defined as the ability to direct the use of and obtain substantially all of the remaining benefits of the product. The Company satisfies its performance obligations under a contract with a customer by transferring goods and services in exchange for monetary consideration from the customer. The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. For some customers, control, and a sale, is transferred at a point in time when the product is delivered to a customer. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Nature of Goods and Services The Company sells component and integrated controlled motion solutions to end customers and original equipment manufacturers (“OEM’s”) through the Company’s own direct sales force and authorized manufacturers’ representatives and distributors. The Company’s products include brush and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, active and passive filters for power quality and harmonic issues, and other controlled motion-related products. The Company’s target markets include Vehicle, Medical, Aerospace & Defense and Determining the Transaction Price The majority of the Company’s contracts have an original duration of less than one year. For these contracts, the Company applies the practical expedient and therefore does not consider the effects of the time value of money. For multiyear contracts, the Company uses judgment to determine whether there is a significant financing component. These contracts are generally those in which the customer has made an up-front payment. Contracts that management determines to include a significant financing component are discounted at the Company’s incremental borrowing rate. The Company incurs interest expense and accrues a contract liability. As the Company satisfies performance obligations and recognizes revenue from these contracts, interest expense is recognized simultaneously. Management does not have any contracts that include a significant financing component as of September 30, 2020. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into geographical regions and target markets. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted below in Note 18, Segment Information A disaggregation of revenue by target market and geography is provided below (in thousands). Three months ended Nine months ended September 30, September 30, Target Market 2020 2019 2020 2019 Vehicle $ 32,378 $ 33,001 $ 79,017 $ 97,375 Industrial 25,307 30,572 86,882 94,076 Medical 23,448 14,550 62,260 39,180 Aerospace & Defense 8,844 12,621 30,503 36,018 Other 4,676 5,889 15,034 16,510 Total $ 94,653 $ 96,633 $ 273,696 $ 283,159 Three months ended Nine months ended September 30, September 30, Geography 2020 2019 2020 2019 United States $ 56,185 $ 64,739 $ 159,862 $ 186,697 Europe 31,800 31,448 93,944 95,010 Other 6,668 446 19,890 1,452 Total $ 94,653 $ 96,633 $ 273,696 $ 283,159 Contract Balances When the timing of the Company’s delivery of product is different from the timing of the payments made by customers, the Company recognizes either a contract asset (performance precedes customer payment) or a contract liability (customer payment precedes performance). Typically, contracts are paid in arrears and are recognized as receivables after the Company considers whether a significant financing component exists. The opening and closing balances of the Company’s contract liabilities are as follows (in thousands): September 30, December 31, 2020 2019 Contract liabilities in accrued liabilities $ 477 $ 454 Contract liabilities in other long-term liabilities 280 — $ 757 $ 454 The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. Significant Payment Terms The Company’s contracts with its customers state the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payments are typically due in full within 30-60 days of delivery. Since the customer agrees to a stated rate and price in the contract that do not vary over the contract, the majority of contracts do not contain variable consideration. Returns, Refunds, and Warranties In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company establishes provisions for estimated returns and warranties. All contracts include a standard warranty clause to guarantee that the product complies with agreed specifications. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2020 | |
INVENTORIES | |
INVENTORIES | 4. INVENTORIES Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows (in thousands): September 30, December 31, 2020 2019 Parts and raw materials $ 42,150 $ 35,849 Work-in-process 7,843 6,951 Finished goods 11,650 10,585 $ 61,643 $ 53,385 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2020 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is classified as follows (in thousands): September 30, December 31, 2020 2019 Land $ 987 $ 977 Building and improvements 13,823 13,366 Machinery, equipment, tools and dies 66,064 58,358 Construction work in progress 14,318 15,536 Furniture, fixtures and other 17,606 15,797 112,798 104,034 Less accumulated depreciation (58,740) (51,026) Property, plant and equipment, net $ 54,058 $ 53,008 Depreciation expense was approximately $2,556 and $2,315 for the quarters ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, depreciation expense was $7,259 and $6,780, respectively. |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2020 | |
GOODWILL | |
GOODWILL | 6. GOODWILL The change in the carrying amount of goodwill for the nine months ended is as follows (in thousands): Beginning balance $ 52,935 Goodwill acquired (Note 2) 6,629 Effect of foreign currency translation 896 Ending balance $ 60,460 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2020 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 7. INTANGIBLE ASSETS Intangible assets on the Company’s condensed consolidated balance sheets consist of the following (in thousands): September 30, 2020 December 31, 2019 Gross Accumulated Net Book Gross Accumulated Net Book Life Amount amortization Value Amount amortization Value Customer lists 8 - 17 years $ 69,112 $ (22,462) $ 46,650 $ 64,314 $ (19,311) $ 45,003 Trade name 10 - 19 years 13,837 (4,799) 9,038 12,222 (4,114) 8,108 Design and technologies 10 - 15 years 15,103 (4,437) 10,666 12,927 (3,554) 9,373 Patents 17 years 24 (12) 12 24 (11) 13 Total $ 98,076 $ (31,710) $ 66,366 $ 89,487 $ (26,990) $ 62,497 Intangible assets resulting from the acquisition of Dynamic Controls were $7,800 (Note 2). The intangible assets acquired consist of customer lists, technology and a trade name. Amortization expense for intangible assets was $1,499 and $1,429 for the quarters ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, amortization expense was Estimated future intangible asset amortization expense as of September 30, 2020 is as follows (in thousands): Estimated Amortization Expense Remainder of 2020 $ 1,499 2021 5,984 2022 6,031 2023 6,040 2024 5,713 Thereafter 41,099 Total estimated amortization expense $ 66,366 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2020 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 8. STOCK-BASED COMPENSATION Stock Incentive Plans The Company’s Stock Incentive Plans provide for the granting of stock awards, including restricted stock, stock options and stock appreciation rights, to employees and non-employees, including directors of the Company. Restricted Stock For the nine months ended ended September 30, 2020, 160,437 shares of unvested restricted stock were awarded at a weighted average market value of $33.51 . Of the restricted shares granted, shares have performance-based vesting conditions. The value of the shares is amortized to compensation expense over the related service period, which is normally , or over the estimated performance period. Shares of unvested restricted stock are generally forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards. The following is a summary of restricted stock activity for the nine-months ended September 30, 2020: Number of shares Outstanding at beginning of period 186,702 Awarded 160,437 Vested (93,260) Forfeited (2,583) Outstanding at end of period 251,296 Stock-based compensation expense, net of forfeitures, of $920 and $834 was recorded for the quarters ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, Stock-based compensation expense, net of forfeitures, of $2,640 and $2,374 was recorded, respectively. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2020 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | 9. ACCRUED LIABILITIES Accrued liabilities consist of the following (in thousands): September 30, December 31, 2020 2019 Compensation and fringe benefits $ 11,056 $ 12,967 Warranty reserve 1,527 1,075 Income taxes payable 539 2,231 Right of use liabilities 4,125 3,203 Other accrued expenses 5,574 3,525 $ 22,821 $ 23,001 |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 9 Months Ended |
Sep. 30, 2020 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 10. DEBT OBLIGATIONS Debt obligations consisted of the following (in thousands): September 30, December 31, 2020 2019 Long-term Debt Revolving Credit Facility, long-term (1) $ 124,999 $ 110,085 Unamortized debt issuance costs (612) (320) Long-term debt $ 124,387 $ 109,765 (1) The effective rate of the Amended Revolving Facility is 2.36% at September 30, 2020. Amended Revolving Credit Facility On February 12, 2020, the Company entered into a First Amended and Restated Credit Agreement (the “Amended Credit Agreement”) for a $225 million revolving credit facility (the “Amended Revolving Facility”). The significant changes made to the Company’s prior credit facility by the Amended Credit Agreement include (i) increasing the maximum principal amount from million accordion amount, (iii) decreasing certain interest-rate margins and fees, and (iv) extending the term to February 2025 from the original term of October 2021. HSBC Bank USA, National Association is the administrative agent, and HSBC Securities (USA) Inc., KeyBank N.A, Wells Fargo Bank, N.A and Citizens Bank, N.A. are joint lead arrangers. Borrowings under the Amended Revolving Facility bear interest at the LIBOR Rate (as defined in the Amended Credit Agreement) plus a margin of 1.00% to 1.75% or the Prime Rate (as defined in the Amended Credit Agreement) plus a margin of 0% to 0.75%, in each case depending on the Company’s ratio of total funded indebtedness (as defined in the Amended Credit Agreement) to Consolidated trailing twelve-month EBITDA (the “Total Leverage Ratio”). At September 30, 2020, the applicable margin for LIBOR Rate borrowings was % at September 30, 2020) on the unused portion of the Amended Revolving Facility, also based on the Company’s Total Leverage Ratio. The Amended Revolving Facility is secured by substantially all of the Company’s non-realty assets and is fully and unconditionally guaranteed by certain of the Company’s subsidiaries. The Amended Credit Agreement contains certain financial covenants related to minimum interest coverage and total leverage ratio at the end of each quarter. The Amended Credit Agreement also includes other covenants and restrictions, including limits on the amount of additional indebtedness, and restrictions on the Company’s ability to merge or sell all, or substantially all, of its assets. The Company was in compliance with all covenants at September 30, 2020. As of September 30, 2020, the unused Amended Revolving Facility was $100,001 . The amount available to borrow may be reduced based upon our debt and EBITDA levels, which impacts our covenant calculations. Other The China Credit Facility provides credit of $1,467 (Chinese Renminbi 10,000 ) (“the China Facility”). The China Facility is a demand revolving facility used for working capital and capital equipment needs at the Company’s China operations. The term is annual and may be cancelled at the bank’s discretion. The interest rate shall be agreed upon by the Lender and the Borrower before the Utilization Date (as defined in the China Facility) and shall be specified in the Utilization Request (as defined in the China Facility). Collateral for the facility is a guarantee issued by the Company. There have been |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 11. DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, and foreign exchange risk primarily through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash payments principally related to the Company’s borrowings. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In February 2017, the Company entered into The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2020 and 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The Company estimates that an additional $896 will be reclassified as an increase to interest expense over the next twelve months. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019 (in thousands): Asset Derivatives Liability Derivatives Fair value as of: Fair value as of: Derivatives designated as Balance Sheet September 30, December 31, Balance Sheet September 30, December 31, hedging instruments Location 2020 2019 Location 2020 2019 Interest rate products Other long-term assets $ — $ — Other long-term liabilities $ 2,137 $ 363 The tables below present the effect of cash flow hedge accounting on other comprehensive income (loss) (“OCI”) for the three and nine months ended September 30, 2020 and 2019 (in thousands): Amount of pre-tax loss recognized Amount of pre-tax loss recognized in OCI on derivatives in OCI on derivative Derivatives in cash flow hedging relationships Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Interest rate products $ (133) $ (108) $ (2,184) $ (914) Amount of pre-tax gain (loss) reclassified Amount of pre-tax gain (loss) reclassified from accumulated OCI into income from accumulated OCI into income Location of gain (loss) reclassified Three months ended September 30, Nine months ended September 30, from accumulated OCI into income 2020 2019 2020 2019 Interest income (expense) $ (224) $ 27 $ (410) $ 128 The table below presents the effect of the Company’s derivative financial instruments on the condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2020 and 2019 (in thousands): Total amounts of income and expense Total amounts of income and expense line items presented that reflect the line items presented that reflect the effects of cash flow hedges recorded effects of cash flow hedges recorded Three months ended September 30, Nine months ended September 30, Derivatives designated as hedging instruments Income Statement Location 2020 2019 2020 2019 Interest rate products Interest Expense $ 844 $ 1,359 $ 2,799 $ 3,974 The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 2020 and December 31, 2019. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented in the condensed consolidated balance sheets (in thousands). Gross amounts Net amounts of liabilities Gross amounts not offset in the condensed consolidated As of Gross amounts offset in the presented in the balance sheets September 30, of recognized condensed consolidated condensed consolidated Financial Cash collateral 2020 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 2,137 $ — $ 2,137 $ — $ — $ 2,137 Gross amounts Net amounts of liabilities Gross amounts not offset in the condensed consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized condensed consolidated condensed consolidated Financial Cash collateral 2019 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 363 $ — $ 363 $ — $ — $ 363 The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE | |
FAIR VALUE | 12. FAIR VALUE Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs. These two types of inputs create the following three - level fair value hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model - derived valuations whose inputs or significant value drivers are observable. Level 3: Significant inputs to the valuation model that are unobservable. The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the condensed consolidated balance sheets for these assets and liabilities approximate their fair value because of the immediate or short-term maturities of these financial instruments. The following tables presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, respectively, by level within the fair value hierarchy (in thousands): September 30, 2020 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 5,898 $ — $ — Deferred compensation plan assets 4,777 — — Interest rate swaps — (2,137) — December 31, 2019 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,099 $ — $ — Deferred compensation plan assets 4,690 — — Interest rate swaps — (363) — |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | 13. INCOME TAXES The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws, settlements with taxing authorities and foreign currency fluctuations. The effective income tax rate as a percentage of income before income taxes was 25.4% and 36.9% in the third quarter 2020 and 2019, respectively. The effective tax rate includes a discrete tax benefit of (2.6)% and tax provision of 5.9% for the third quarters of 2020 and 2019 respectively. These discrete items primarily related to global intangible low-taxed income (GILTI) regulation changes in 2020 and the settlement of a foreign tax audit in 2019. For the nine months ended September 30, 2020 and 2019, the effective income tax rate as a percentage of income before income taxes was The effective tax rate before discrete items varies from the statutory rate primarily due to differences in state taxes, the impact of international tax provisions in the U.S., the difference in foreign tax rates and the mix of foreign and domestic income. The decrease in the effective income tax rate as a percentage of income before income taxes from 2019 to 2020 is a result of an increase in our estimated research and development tax credit as a percentage of income before taxes, as well as a lower amount of GILTI. In July 2020, U.S. Treasury released Final and Proposed Regulations related to the treatment of income that is subject to high rate of foreign tax under the GILTI and Subpart F income regimes. These provisions would be effective for the Company starting in 2021, but includes retroactive provisions that may allow for early adoption. In the third quarter of 2020, the Company adopted these provisions, which resulted in a discrete tax benefit of |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2020 | |
LEASES | |
LEASES | 14. LEASES The Company has operating leases for office space, manufacturing equipment, computer equipment and automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for a long-term period, and some leases include options to terminate the leases Short term and variable lease expense were not material in any of the periods presented. Supplemental cash flow information related to the Company’s operating leases for the nine-month periods ended September 30, 2020 and 2019 was as follows (in thousands): Nine months ended September 30, 2020 2019 Cash paid for amounts included in the measurement of operating leases $ 3,341 $ 3,101 ROU assets obtained in exchange for operating lease obligations $ 2,395 $ 260 ROU assets recorded upon adoption of ASC 842 $ — $ 20,344 ROU assets obtained in acquisitions (Note 2) $ 2,735 $ — The following table presents the maturity of the Company’s operating lease liabilities as of September 30, 2020 (in thousands): 2020 (remaining 3 months) $ 1,214 2021 4,334 2022 3,413 2023 2,684 2024 2,140 2025 1,990 Thereafter 4,403 Total undiscounted cash flows $ 20,178 Less: present value discount (1,410) Total lease liabilities $ 18,768 As of September 30, 2020, the Company had no additional significant operating or finance leases that had not yet commenced. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated Other Comprehensive Income (Loss) (“AOCI”) for the quarters ended September 30, 2020 and 2019 is comprised of the following (in thousands): Foreign Currency Defined Benefit Tax effect of Translation Plan Liability Cash Flow Hedges Cash Flow Hedges Adjustment Total At June 30, 2020 $ (1,628) $ (2,228) $ 534 (9,122) $ (12,444) Unrealized loss on cash flow hedges — (133) 33 — (100) Amounts reclassified from AOCI — 224 (54) — 170 Foreign currency translation gain — — — 3,433 3,433 At September 30, 2020 $ (1,628) $ (2,137) $ 513 $ (5,689) $ (8,941) Foreign Currency Defined Benefit Tax effect of Translation Plan Liability Cash Flow Hedges Cash Flow Hedges Adjustment Total At June 30, 2019 $ (1,006) $ (341) $ 77 $ (8,285) $ (9,555) Unrealized loss on cash flow hedges — (108) 20 — (88) Amounts reclassified from AOCI — (27) 10 — (17) Foreign currency translation loss — — — (2,369) (2,369) At September 30, 2019 $ (1,006) $ (476) $ 107 $ (10,654) $ (12,029) AOCI for the nine months ended September 30, 2020 and 2019 is comprised of the following (in thousands): Foreign Currency Defined Benefit Tax effect of Translation Plan Liability Cash Flow Hedges Cash Flow Hedges Adjustment Total At December 31, 2019 $ (1,628) $ (363) $ 86 $ (8,626) $ (10,531) Unrealized loss on cash flow hedges — (2,184) 524 — (1,660) Amounts reclassified from AOCI — 410 (97) — 313 Foreign currency translation gain — — — 2,937 2,937 At September 30, 2020 $ (1,628) $ (2,137) $ 513 $ (5,689) $ (8,941) Foreign Currency Defined Benefit Tax effect of Translation Plan Liability Cash Flow Hedges Cash Flow Hedges Adjustment Total At December 31, 2018 $ (1,006) $ 566 $ (132) $ (7,946) $ (8,518) Unrealized loss on cash flow hedges — (914) 201 — (713) Amounts reclassified from AOCI — (128) 38 — (90) Foreign currency translation loss — — — (2,708) (2,708) At September 30, 2019 $ (1,006) $ (476) $ 107 $ (10,654) $ (12,029) The realized losses relating to the Company’s interest rate swap hedges were reclassified from accumulated other comprehensive income (loss) and included in interest expense in the condensed consolidated statements of income and comprehensive income. |
DIVIDENDS PER SHARE
DIVIDENDS PER SHARE | 9 Months Ended |
Sep. 30, 2020 | |
DIVIDENDS PER SHARE | |
DIVIDENDS PER SHARE | 16. DIVIDENDS PER SHARE The Company declared a quarterly dividend of $0.03 per share in each quarter of 2020 and 2019. Total dividends declared were $874 and $863 in the nine months ended September 30, 2020 and 2019, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 17. EARNINGS PER SHARE Basic and diluted weighted-average shares outstanding are as follows (in thousands): Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Basic weighted average shares outstanding 9,514 9,414 9,487 9,390 Dilutive effect of equity awards 65 50 52 45 Diluted weighted average shares outstanding 9,579 9,464 9,539 9,435 For the three and nine months ended September 30, 2020 and 2019, the anti-dilutive common shares excluded from the calculation of diluted earnings per share were immaterial. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2020 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 18. SEGMENT INFORMATION The Company operates in one segment for the manufacture and marketing of controlled motion products for end user and OEM applications. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services in which the entity holds material assets and reports revenue. Financial information related to the foreign subsidiaries is summarized below (in thousands): Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Revenues derived from foreign subsidiaries $ 38,468 $ 31,894 $ 113,834 $ 96,461 Revenues derived from foreign subsidiaries and identifiable assets outside of the United States are primarily attributable to Europe. Identifiable foreign assets were $127,369 and $95,777 as of September 30, 2020 and December 31, 2019, respectively. Sales to customers outside of the United States by all subsidiaries were $41,411 and $39,534 during the quarters ended September 30, 2020 and 2019, respectively, and $128,170 and $122,020 for the nine months ended September 30, 2020 and 2019, respectively. For third quarter 2020 and 2019, one customer accounted for 20% and 17% of revenues, respectively, and for the nine months ended September 30, 2020 and 2019 for 15% and 16% of revenues, respectively. As of September 30, 2020 and December 31, 2019 this customer represented |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2020 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 19. RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting pronouncements In June 2016, FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This guidance provides relief for impacted areas as it relates to impending reference rate reform and contains optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other areas or transactions, subject to meeting certain criteria, that are impacted by reference rate reform. This ASU is effective upon issuance for all entities and elections of certain optional expedients are required to apply the provisions of the guidance. The Company adopted this ASU effective January 1, 2020 on a prospective basis, and the Company has elected the expedients related to the probability of hedged interest payments, regardless of any expected future modification in terms related to reference rate reform, as well as the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Should the Company elect further optional expedients as it relates to reference rate reform, disclosure of those elections will be done in the fiscal period in which the elections are made. The adoption did not have a material impact on its condensed consolidated financial statements. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) - Dynamic Controls | 9 Months Ended |
Sep. 30, 2020 | |
ACQUISITIONS | |
Schedule of purchase price allocation and estimated fair value of the assets acquired | The preliminary allocation of the purchase price paid for Dynamic Controls is based on estimated fair values of the assets acquired and liabilities assumed of Dynamic Controls as of March 7, 2020 is as follows (in thousands): Cash and cash equivalents $ 11,437 Accounts receivable 4,129 Inventory 3,329 Other assets, net 769 Property, plant and equipment 1,185 Right of use assets 2,735 Intangible assets 7,800 Goodwill 6,629 Current liabilities (7,354) Lease liabilities (2,739) Net deferred income tax liabilities (1,755) Net purchase price $ 26,165 |
Schedule of unaudited pro forma financial information | Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Revenues $ 94,653 $ 104,277 $ 278,858 $ 306,191 Net income $ 3,976 $ 4,805 $ 11,569 $ 12,762 Earnings per share - basic $ 0.42 $ 0.51 $ 1.22 $ 1.36 Earnings per share - diluted $ 0.42 $ 0.51 $ 1.21 $ 1.35 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
REVENUE RECOGNITION | |
Schedule of reconciliation of disaggregated revenue by target market and geography | A disaggregation of revenue by target market and geography is provided below (in thousands). Three months ended Nine months ended September 30, September 30, Target Market 2020 2019 2020 2019 Vehicle $ 32,378 $ 33,001 $ 79,017 $ 97,375 Industrial 25,307 30,572 86,882 94,076 Medical 23,448 14,550 62,260 39,180 Aerospace & Defense 8,844 12,621 30,503 36,018 Other 4,676 5,889 15,034 16,510 Total $ 94,653 $ 96,633 $ 273,696 $ 283,159 Three months ended Nine months ended September 30, September 30, Geography 2020 2019 2020 2019 United States $ 56,185 $ 64,739 $ 159,862 $ 186,697 Europe 31,800 31,448 93,944 95,010 Other 6,668 446 19,890 1,452 Total $ 94,653 $ 96,633 $ 273,696 $ 283,159 |
Schedule of opening and closing balances of the Company's receivables, contract asset, and contract liability | The opening and closing balances of the Company’s contract liabilities are as follows (in thousands): September 30, December 31, 2020 2019 Contract liabilities in accrued liabilities $ 477 $ 454 Contract liabilities in other long-term liabilities 280 — $ 757 $ 454 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
INVENTORIES | |
Schedule of inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value | Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows (in thousands): September 30, December 31, 2020 2019 Parts and raw materials $ 42,150 $ 35,849 Work-in-process 7,843 6,951 Finished goods 11,650 10,585 $ 61,643 $ 53,385 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of classification of property, plant and equipment | Property, plant and equipment is classified as follows (in thousands): September 30, December 31, 2020 2019 Land $ 987 $ 977 Building and improvements 13,823 13,366 Machinery, equipment, tools and dies 66,064 58,358 Construction work in progress 14,318 15,536 Furniture, fixtures and other 17,606 15,797 112,798 104,034 Less accumulated depreciation (58,740) (51,026) Property, plant and equipment, net $ 54,058 $ 53,008 |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
GOODWILL | |
Schedule of change in the carrying amount of goodwill | The change in the carrying amount of goodwill for the nine months ended is as follows (in thousands): Beginning balance $ 52,935 Goodwill acquired (Note 2) 6,629 Effect of foreign currency translation 896 Ending balance $ 60,460 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | Intangible assets on the Company’s condensed consolidated balance sheets consist of the following (in thousands): September 30, 2020 December 31, 2019 Gross Accumulated Net Book Gross Accumulated Net Book Life Amount amortization Value Amount amortization Value Customer lists 8 - 17 years $ 69,112 $ (22,462) $ 46,650 $ 64,314 $ (19,311) $ 45,003 Trade name 10 - 19 years 13,837 (4,799) 9,038 12,222 (4,114) 8,108 Design and technologies 10 - 15 years 15,103 (4,437) 10,666 12,927 (3,554) 9,373 Patents 17 years 24 (12) 12 24 (11) 13 Total $ 98,076 $ (31,710) $ 66,366 $ 89,487 $ (26,990) $ 62,497 |
Schedule of estimated amortization expense for intangible assets | Estimated future intangible asset amortization expense as of September 30, 2020 is as follows (in thousands): Estimated Amortization Expense Remainder of 2020 $ 1,499 2021 5,984 2022 6,031 2023 6,040 2024 5,713 Thereafter 41,099 Total estimated amortization expense $ 66,366 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
STOCK-BASED COMPENSATION | |
Summary of restricted stock activity | The following is a summary of restricted stock activity for the nine-months ended September 30, 2020: Number of shares Outstanding at beginning of period 186,702 Awarded 160,437 Vested (93,260) Forfeited (2,583) Outstanding at end of period 251,296 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
ACCRUED LIABILITIES | |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): September 30, December 31, 2020 2019 Compensation and fringe benefits $ 11,056 $ 12,967 Warranty reserve 1,527 1,075 Income taxes payable 539 2,231 Right of use liabilities 4,125 3,203 Other accrued expenses 5,574 3,525 $ 22,821 $ 23,001 |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
DEBT OBLIGATIONS | |
Schedule of debt obligations | Debt obligations consisted of the following (in thousands): September 30, December 31, 2020 2019 Long-term Debt Revolving Credit Facility, long-term (1) $ 124,999 $ 110,085 Unamortized debt issuance costs (612) (320) Long-term debt $ 124,387 $ 109,765 (1) The effective rate of the Amended Revolving Facility is 2.36% at September 30, 2020. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of fair value of the Company's derivative financial instruments as well as classification on the condensed consolidated balance sheets | The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019 (in thousands): Asset Derivatives Liability Derivatives Fair value as of: Fair value as of: Derivatives designated as Balance Sheet September 30, December 31, Balance Sheet September 30, December 31, hedging instruments Location 2020 2019 Location 2020 2019 Interest rate products Other long-term assets $ — $ — Other long-term liabilities $ 2,137 $ 363 |
Schedule of effect of cash flow hedge accounting on other comprehensive income (loss) (OCI) | The tables below present the effect of cash flow hedge accounting on other comprehensive income (loss) (“OCI”) for the three and nine months ended September 30, 2020 and 2019 (in thousands): Amount of pre-tax loss recognized Amount of pre-tax loss recognized in OCI on derivatives in OCI on derivative Derivatives in cash flow hedging relationships Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Interest rate products $ (133) $ (108) $ (2,184) $ (914) Amount of pre-tax gain (loss) reclassified Amount of pre-tax gain (loss) reclassified from accumulated OCI into income from accumulated OCI into income Location of gain (loss) reclassified Three months ended September 30, Nine months ended September 30, from accumulated OCI into income 2020 2019 2020 2019 Interest income (expense) $ (224) $ 27 $ (410) $ 128 |
Schedule of effect of the Company's derivative financial instruments on the condensed consolidated statements of income and comprehensive income | The table below presents the effect of the Company’s derivative financial instruments on the condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2020 and 2019 (in thousands): Total amounts of income and expense Total amounts of income and expense line items presented that reflect the line items presented that reflect the effects of cash flow hedges recorded effects of cash flow hedges recorded Three months ended September 30, Nine months ended September 30, Derivatives designated as hedging instruments Income Statement Location 2020 2019 2020 2019 Interest rate products Interest Expense $ 844 $ 1,359 $ 2,799 $ 3,974 |
Schedule of fair value provides the location that derivative assets and liabilities | The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented in the condensed consolidated balance sheets (in thousands). Gross amounts Net amounts of liabilities Gross amounts not offset in the condensed consolidated As of Gross amounts offset in the presented in the balance sheets September 30, of recognized condensed consolidated condensed consolidated Financial Cash collateral 2020 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 2,137 $ — $ 2,137 $ — $ — $ 2,137 Gross amounts Net amounts of liabilities Gross amounts not offset in the condensed consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized condensed consolidated condensed consolidated Financial Cash collateral 2019 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 363 $ — $ 363 $ — $ — $ 363 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE | |
Schedule of financial assets that are accounted for at fair value on a recurring basis | The following tables presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, respectively, by level within the fair value hierarchy (in thousands): September 30, 2020 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 5,898 $ — $ — Deferred compensation plan assets 4,777 — — Interest rate swaps — (2,137) — December 31, 2019 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,099 $ — $ — Deferred compensation plan assets 4,690 — — Interest rate swaps — (363) — |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
LEASES | |
Schedule of supplemental cash flow information related to the operating leases | Supplemental cash flow information related to the Company’s operating leases for the nine-month periods ended September 30, 2020 and 2019 was as follows (in thousands): Nine months ended September 30, 2020 2019 Cash paid for amounts included in the measurement of operating leases $ 3,341 $ 3,101 ROU assets obtained in exchange for operating lease obligations $ 2,395 $ 260 ROU assets recorded upon adoption of ASC 842 $ — $ 20,344 ROU assets obtained in acquisitions (Note 2) $ 2,735 $ — |
Schedule of maturity of the operating lease liabilities | The following table presents the maturity of the Company’s operating lease liabilities as of September 30, 2020 (in thousands): 2020 (remaining 3 months) $ 1,214 2021 4,334 2022 3,413 2023 2,684 2024 2,140 2025 1,990 Thereafter 4,403 Total undiscounted cash flows $ 20,178 Less: present value discount (1,410) Total lease liabilities $ 18,768 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Schedule of accumulated other comprehensive income (loss) ("AOCI") | Accumulated Other Comprehensive Income (Loss) (“AOCI”) for the quarters ended September 30, 2020 and 2019 is comprised of the following (in thousands): Foreign Currency Defined Benefit Tax effect of Translation Plan Liability Cash Flow Hedges Cash Flow Hedges Adjustment Total At June 30, 2020 $ (1,628) $ (2,228) $ 534 (9,122) $ (12,444) Unrealized loss on cash flow hedges — (133) 33 — (100) Amounts reclassified from AOCI — 224 (54) — 170 Foreign currency translation gain — — — 3,433 3,433 At September 30, 2020 $ (1,628) $ (2,137) $ 513 $ (5,689) $ (8,941) Foreign Currency Defined Benefit Tax effect of Translation Plan Liability Cash Flow Hedges Cash Flow Hedges Adjustment Total At June 30, 2019 $ (1,006) $ (341) $ 77 $ (8,285) $ (9,555) Unrealized loss on cash flow hedges — (108) 20 — (88) Amounts reclassified from AOCI — (27) 10 — (17) Foreign currency translation loss — — — (2,369) (2,369) At September 30, 2019 $ (1,006) $ (476) $ 107 $ (10,654) $ (12,029) AOCI for the nine months ended September 30, 2020 and 2019 is comprised of the following (in thousands): Foreign Currency Defined Benefit Tax effect of Translation Plan Liability Cash Flow Hedges Cash Flow Hedges Adjustment Total At December 31, 2019 $ (1,628) $ (363) $ 86 $ (8,626) $ (10,531) Unrealized loss on cash flow hedges — (2,184) 524 — (1,660) Amounts reclassified from AOCI — 410 (97) — 313 Foreign currency translation gain — — — 2,937 2,937 At September 30, 2020 $ (1,628) $ (2,137) $ 513 $ (5,689) $ (8,941) Foreign Currency Defined Benefit Tax effect of Translation Plan Liability Cash Flow Hedges Cash Flow Hedges Adjustment Total At December 31, 2018 $ (1,006) $ 566 $ (132) $ (7,946) $ (8,518) Unrealized loss on cash flow hedges — (914) 201 — (713) Amounts reclassified from AOCI — (128) 38 — (90) Foreign currency translation loss — — — (2,708) (2,708) At September 30, 2019 $ (1,006) $ (476) $ 107 $ (10,654) $ (12,029) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS PER SHARE | |
Schedule of basic and diluted weighted-average shares outstanding | Basic and diluted weighted-average shares outstanding are as follows (in thousands): Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Basic weighted average shares outstanding 9,514 9,414 9,487 9,390 Dilutive effect of equity awards 65 50 52 45 Diluted weighted average shares outstanding 9,579 9,464 9,539 9,435 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
SEGMENT INFORMATION | |
Schedule of revenue related to foreign subsidiaries | Financial information related to the foreign subsidiaries is summarized below (in thousands): Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Revenues derived from foreign subsidiaries $ 38,468 $ 31,894 $ 113,834 $ 96,461 Revenues derived from foreign subsidiaries and identifiable assets outside of the United States are primarily attributable to Europe. |
ACQUISITION (Details)
ACQUISITION (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 07, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
ACQUISITIONS | ||||||
Goodwill | $ 60,460 | $ 60,460 | $ 52,935 | |||
Revenues | 94,653 | $ 96,633 | 273,696 | $ 283,159 | ||
Dynamic Controls | ||||||
ACQUISITIONS | ||||||
Business acquisition percentage of voting interests acquired | 100.00% | |||||
Transaction costs related to acquisition | 8 | 432 | ||||
Cash and cash equivalents | $ 11,437 | |||||
Accounts receivable | 4,129 | |||||
Inventory | 3,329 | |||||
Other assets, net | 769 | |||||
Property, plant and equipment | 1,185 | |||||
Right of use assets | 2,735 | 2,735 | 2,735 | |||
Intangible assets | 7,800 | 7,800 | 7,800 | |||
Goodwill | 6,629 | |||||
Current liabilities | (7,354) | |||||
Lease liabilities | (2,739) | |||||
Net deferred income tax liabilities | (1,755) | |||||
Net purchase price | $ 26,165 | |||||
Reduction of Goodwill owing to measurement period adjustments | 77 | |||||
Revenues | 6,418 | 18,833 | ||||
Distributed Earnings | $ (62) | $ 1,110 | ||||
Pro forma Condensed Combined Financial Information | ||||||
Diluted earnings per share (in dollars per share) | $ 0.42 | $ 0.51 | $ 1.21 | $ 1.35 | ||
Revenues | $ 94,653 | $ 104,277 | $ 278,858 | $ 306,191 | ||
Net income | $ 3,976 | $ 4,805 | $ 11,569 | $ 12,762 | ||
Earnings per share - basic | $ 0.42 | $ 0.51 | $ 1.22 | $ 1.36 | ||
Earnings per share - diluted | $ 0.42 | $ 0.51 | $ 1.21 | $ 1.35 | ||
Dynamic Controls | Customer lists | ||||||
ACQUISITIONS | ||||||
Intangible assets | $ 4,400 | $ 4,400 | ||||
Amortization period (in years) | 16 years | |||||
Dynamic Controls | Technology | ||||||
ACQUISITIONS | ||||||
Intangible assets | 1,900 | 1,900 | ||||
Amortization period (in years) | 13 years | |||||
Dynamic Controls | Trade name | ||||||
ACQUISITIONS | ||||||
Intangible assets | $ 1,500 | $ 1,500 | ||||
Amortization period (in years) | 18 years |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of Revenue (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | |
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Number of reportable segment | segment | 1 | |||
Revenues | $ 94,653 | $ 96,633 | $ 273,696 | $ 283,159 |
United States | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Revenues | 56,185 | 64,739 | 159,862 | 186,697 |
Europe | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Revenues | 31,800 | 31,448 | 93,944 | 95,010 |
Other | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Revenues | 6,668 | 446 | 19,890 | 1,452 |
Vehicle | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Revenues | 32,378 | 33,001 | 79,017 | 97,375 |
Industrial | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Revenues | 25,307 | 30,572 | 86,882 | 94,076 |
Medical | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Revenues | 23,448 | 14,550 | 62,260 | 39,180 |
Aerospace & Defense | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Revenues | 8,844 | 12,621 | 30,503 | 36,018 |
Other | ||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | ||||
Revenues | $ 4,676 | $ 5,889 | $ 15,034 | $ 16,510 |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract Balances (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
REVENUE RECOGNITION | ||
Contract liabilities in accrued liabilities | $ 477 | $ 454 |
Contract liabilities in other long-term liabilities | 280 | |
Contract liabilities | $ 757 | $ 454 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
INVENTORIES | ||
Parts and raw materials | $ 42,150 | $ 35,849 |
Work-in-process | 7,843 | 6,951 |
Finished goods | 11,650 | 10,585 |
Inventories | $ 61,643 | $ 53,385 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property, plant and equipment | |||||
Property, plant and equipment, gross | $ 112,798 | $ 112,798 | $ 104,034 | ||
Less accumulated depreciation | (58,740) | (58,740) | (51,026) | ||
Property, plant and equipment, net | 54,058 | 54,058 | 53,008 | ||
Depreciation expense | 2,556 | $ 2,315 | 7,259 | $ 6,780 | |
Land | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 987 | 987 | 977 | ||
Building and improvements | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 13,823 | 13,823 | 13,366 | ||
Machinery, equipment, tools and dies | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 66,064 | 66,064 | 58,358 | ||
Construction work in progress | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 14,318 | 14,318 | 15,536 | ||
Furniture, fixtures and other | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | $ 17,606 | $ 17,606 | $ 15,797 |
GOODWILL (Details)
GOODWILL (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Change in goodwill | |
Beginning balance | $ 52,935 |
Goodwill acquired (Note 2) | 6,629 |
Effect of foreign currency translation | 896 |
Ending balance | $ 60,460 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Mar. 07, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Intangible assets subject to amortization | ||||||
Gross Amount | $ 98,076 | $ 98,076 | $ 89,487 | |||
Accumulated amortization | (31,710) | (31,710) | (26,990) | |||
Net Book Value | 66,366 | 66,366 | 62,497 | |||
Amortization expense for intangible assets | 1,499 | $ 1,429 | 4,423 | $ 4,291 | ||
Estimated amortization expense | ||||||
Remainder of 2020 | 1,499 | 1,499 | ||||
2021 | 5,984 | 5,984 | ||||
2022 | 6,031 | 6,031 | ||||
2023 | 6,040 | 6,040 | ||||
2024 | 5,713 | 5,713 | ||||
Thereafter | 41,099 | 41,099 | ||||
Total estimated amortization expense | 66,366 | 66,366 | ||||
Dynamic Controls | ||||||
Intangible assets subject to amortization | ||||||
Intangible assets | $ 7,800 | 7,800 | 7,800 | |||
Customer lists | ||||||
Intangible assets subject to amortization | ||||||
Gross Amount | 69,112 | 69,112 | 64,314 | |||
Accumulated amortization | (22,462) | (22,462) | (19,311) | |||
Net Book Value | 46,650 | 46,650 | 45,003 | |||
Customer lists | Dynamic Controls | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 16 years | |||||
Intangible assets | 4,400 | $ 4,400 | ||||
Customer lists | Minimum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 8 years | |||||
Customer lists | Maximum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 17 years | |||||
Trade name | ||||||
Intangible assets subject to amortization | ||||||
Gross Amount | 13,837 | $ 13,837 | 12,222 | |||
Accumulated amortization | (4,799) | (4,799) | (4,114) | |||
Net Book Value | 9,038 | 9,038 | 8,108 | |||
Trade name | Dynamic Controls | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 18 years | |||||
Intangible assets | 1,500 | $ 1,500 | ||||
Trade name | Minimum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 10 years | |||||
Trade name | Maximum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 19 years | |||||
Design and technologies | ||||||
Intangible assets subject to amortization | ||||||
Gross Amount | 15,103 | $ 15,103 | 12,927 | |||
Accumulated amortization | (4,437) | (4,437) | (3,554) | |||
Net Book Value | 10,666 | $ 10,666 | 9,373 | |||
Design and technologies | Minimum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 10 years | |||||
Design and technologies | Maximum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 15 years | |||||
Patents | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 17 years | |||||
Gross Amount | 24 | $ 24 | 24 | |||
Accumulated amortization | (12) | (12) | (11) | |||
Net Book Value | $ 12 | $ 12 | $ 13 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Additional disclosures | ||||
Stock based compensation expense, net of forfeitures | $ 920 | $ 834 | $ 2,640 | $ 2,374 |
Restricted Stock | ||||
STOCK-BASED COMPENSATION | ||||
Weighted average market value (in dollars per share) | $ 33.51 | |||
Service period over which value of the shares is amortized to compensation expense | 3 years | |||
Number of Non-vested Restricted Shares | ||||
Outstanding at beginning of period (in shares) | 186,702 | |||
Awarded (in shares) | 160,437 | |||
Vested (in shares) | (93,260) | |||
Forfeited (in shares) | (2,583) | |||
Outstanding at end of period (in shares) | 251,296 | 251,296 | ||
Restricted Stock | Performance based vesting | ||||
Number of Non-vested Restricted Shares | ||||
Awarded (in shares) | 100,403 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
ACCRUED LIABILITIES | ||
Compensation and fringe benefits | $ 11,056 | $ 12,967 |
Warranty reserve | 1,527 | 1,075 |
Income taxes payable | 539 | 2,231 |
Right of use liabilities | 4,125 | 3,203 |
Other accrued expenses | 5,574 | 3,525 |
Accrued liabilities | $ 22,821 | $ 23,001 |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) ¥ in Thousands | 9 Months Ended | ||||
Sep. 30, 2020USD ($) | Sep. 30, 2020CNY (¥) | Feb. 12, 2020USD ($) | Feb. 11, 2020USD ($) | Dec. 31, 2019USD ($) | |
DEBT OBLIGATIONS | |||||
Long-term debt | $ 124,387,000 | $ 109,765,000 | |||
Unamortized debt issuance costs | (612,000) | (320,000) | |||
Revolving Credit Facility | |||||
DEBT OBLIGATIONS | |||||
Long-term debt | $ 124,999,000 | 110,085,000 | |||
Effective rate (as a percent) | 2.36% | 2.36% | |||
Amended Revolving Facility | |||||
DEBT OBLIGATIONS | |||||
Maximum borrowing capacity | $ 225,000,000 | ||||
Available borrowing capacity | $ 75,000,000 | ||||
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent) | 0.175% | ||||
Unused amount of credit facility | $ 100,001 | ||||
Amended Revolving Facility | Minimum | |||||
DEBT OBLIGATIONS | |||||
Maximum borrowing capacity | $ 175,000,000 | ||||
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent) | 0.10% | ||||
Amended Revolving Facility | Maximum | |||||
DEBT OBLIGATIONS | |||||
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent) | 0.225% | ||||
Amended Revolving Facility | LIBOR | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 1.50% | ||||
Amended Revolving Facility | LIBOR | Minimum | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 1.00% | ||||
Amended Revolving Facility | LIBOR | Maximum | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 1.75% | ||||
Amended Revolving Facility | Prime Rate | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 0.50% | ||||
Amended Revolving Facility | Prime Rate | Minimum | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 0.00% | ||||
Amended Revolving Facility | Prime Rate | Maximum | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 0.75% | ||||
China Credit Facility | |||||
DEBT OBLIGATIONS | |||||
Maximum borrowing capacity | $ 1,467,000 | ¥ 10,000 | |||
Average outstanding borrowings | 0 | ||||
Principal amount of debt borrowed | $ 0 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Mar. 31, 2020USD ($)derivative | Dec. 31, 2019USD ($) | Feb. 28, 2017USD ($)derivative | |
Interest Rate Swaps | |||||||
Derivative financial instruments | |||||||
Number of derivative instruments | derivative | 2 | 3 | |||||
Notional amount of interest rate swap derivatives | $ 60,000 | ||||||
Notional amount of interest rate swap derivatives | $ 40,000 | ||||||
Estimated amount to be reclassified as an increase to interest expense | $ 896 | ||||||
Interest Rate Swaps | Minimum | |||||||
Derivative financial instruments | |||||||
Notional amount of interest rate swap derivatives | $ 20,000 | ||||||
Derivatives in cash flow hedging relationships | Interest rate products | |||||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | |||||||
Amount of pre-tax loss recognized in OCI on derivative | $ (133) | $ (108) | (2,184) | $ (914) | |||
Derivatives in cash flow hedging relationships | Interest rate products | Interest income (expense) | |||||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | |||||||
Amount of pre-tax gain (loss) reclassified from accumulated OCI into income | (224) | 27 | (410) | 128 | |||
Derivatives designated as hedging instruments | Interest rate products | Interest income (expense) | |||||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | |||||||
Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded | 844 | $ 1,359 | 2,799 | $ 3,974 | |||
Derivatives designated as hedging instruments | Interest rate products | Other Liabilities [Member] | |||||||
Derivative financial instruments | |||||||
Fair value of derivative liability | $ 2,137 | $ 2,137 | $ 363 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Effects of offsetting (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Gross amounts offset in the consolidated balance sheets | ||
Gross amounts of recognized liabilities or Gross amounts offset in the consolidated balance sheets | $ 2,137 | $ 363 |
Net amounts of assets/liabilities presented in the consolidated balance sheets | 2,137 | 363 |
Gross amounts not offset in the consolidated balance sheets | ||
Net amount | $ 2,137 | $ 363 |
FAIR VALUE (Details)
FAIR VALUE (Details) - Recurring basis - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Level 1 | ||
Assets (liabilities) | ||
Pension plan assets | $ 5,898 | $ 6,099 |
Deferred compensation plan assets | 4,777 | 4,690 |
Level 2 | ||
Assets (liabilities) | ||
Interest rate swaps | $ (2,137) | $ (363) |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Effective income tax rate | ||||
Effective income tax rate (as a percent) | 25.40% | 36.90% | 27.60% | 31.10% |
Discrete tax provision (benefit) (as a percent) | 2.6 | (5.9) | (0.3) | 1.5 |
Deferred discrete tax expense benefit percentage | 0.9 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Mar. 07, 2020 | Dec. 31, 2019 | |
LEASES | ||||
Options to terminate the leases | true | |||
Operating lease option to terminate Period | 30 days | |||
Supplemental cash flow information related to the operating leases | ||||
Cash paid for amounts included in the measurement of operating leases | $ 3,341 | $ 3,101 | ||
ROU assets obtained in exchange for operating lease obligations | 2,395 | 260 | ||
ROU assets recorded upon adoption of ASC 842 | $ 20,344 | |||
Lease assets and liabilities | ||||
Right of use assets | 18,115 | $ 16,420 | ||
Right of use liabilities, current | 4,125 | 3,203 | ||
Right of use liabilities, long-term | 14,643 | $ 13,715 | ||
Total ROU lease liabilities | 18,768 | |||
Maturity of the operating lease liabilities | ||||
2020 (remaining 3 months) | 1,214 | |||
2021 | 4,334 | |||
2022 | 3,413 | |||
2023 | 2,684 | |||
2024 | 2,140 | |||
2025 | 1,990 | |||
Thereafter | 4,403 | |||
Total undiscounted cash flows | 20,178 | |||
Less: present value discount | (1,410) | |||
Total lease liabilities | 18,768 | |||
Dynamic Controls | ||||
Supplemental cash flow information related to the operating leases | ||||
Right of use assets | $ 2,735 | $ 2,735 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Balances | $ 126,280 | $ 111,200 | $ 119,194 | $ 101,813 |
Balances | 134,392 | 113,796 | 134,392 | 113,796 |
Accumulated Other Comprehensive Income (Loss) | ||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Balances | (12,444) | (9,555) | (10,531) | (8,518) |
Unrealized loss on cash flow hedges | (100) | (88) | (1,660) | (713) |
Amounts reclassified from AOCI | 170 | (17) | 313 | (90) |
Foreign currency translation gain (loss) | 3,433 | (2,369) | 2,937 | (2,708) |
Balances | (8,941) | (12,029) | (8,941) | (12,029) |
Defined Benefit Plan Liability | ||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Balances | (1,628) | (1,006) | (1,628) | (1,006) |
Balances | (1,628) | (1,006) | (1,628) | (1,006) |
Cash Flow Hedges | ||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Balances | (2,228) | (341) | (363) | 566 |
Unrealized loss on cash flow hedges | (133) | (108) | (2,184) | (914) |
Amounts reclassified from AOCI | 224 | (27) | 410 | (128) |
Balances | (2,137) | (476) | (2,137) | (476) |
Tax effect of Cash Flow Hedges | ||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Balances | 534 | 77 | 86 | (132) |
Unrealized loss on cash flow hedges, Tax effect | 33 | 20 | 524 | 201 |
Amounts reclassified from AOCI, Tax effect | (54) | 10 | (97) | 38 |
Balances | 513 | 107 | 513 | 107 |
Foreign Currency Translation Adjustment | ||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Balances | (9,122) | (8,285) | (8,626) | (7,946) |
Foreign currency translation gain (loss) | 3,433 | (2,369) | 2,937 | (2,708) |
Balances | $ (5,689) | $ (10,654) | $ (5,689) | $ (10,654) |
DIVIDENDS PER SHARE (Details)
DIVIDENDS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
DIVIDENDS PER SHARE | ||||||||||
Dividends declared (in dollars per share) | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 | $ 0.03 | ||
Total dividends declared | $ 874 | $ 863 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic and diluted weighted-average shares outstanding | ||||
Basic weighted average shares outstanding | 9,514 | 9,414 | 9,487 | 9,390 |
Dilutive effect of equity awards | 65 | 50 | 52 | 45 |
Diluted weighted average shares outstanding | 9,579 | 9,464 | 9,539 | 9,435 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment information | |||||
Number of operating segments | segment | 1 | ||||
Identifiable assets | $ 343,851 | $ 343,851 | $ 305,828 | ||
Total Revenue | |||||
Segment information | |||||
Percentage of concentration risk | 20.00% | 17.00% | 15.00% | 16.00% | |
Trade receivables | |||||
Segment information | |||||
Percentage of concentration risk | 23.00% | 17.00% | |||
Outside the United States | |||||
Segment information | |||||
Revenues derived from foreign subsidiaries | $ 41,411 | $ 39,534 | $ 128,170 | $ 122,020 | |
Wholly owned foreign subsidiaries | |||||
Segment information | |||||
Revenues derived from foreign subsidiaries | 38,468 | $ 31,894 | 113,834 | $ 96,461 | |
Identifiable assets | $ 127,369 | $ 127,369 | $ 95,777 |