Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 18, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Entity File Number | 1-07109 | |
Entity Registrant Name | SERVOTRONICS INC /DE/ | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 16-0837866 | |
Entity Address, Address Line One | 1110 Maple Street | |
Entity Address, City or Town | Elma | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 14059 | |
City Area Code | 716 | |
Local Phone Number | 655-5990 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 2,491,667 | |
Entity Central Index Key | 0000089140 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Trading Symbol | SVT | |
Title of 12(b) Security | Common Stock | |
Security Exchange Name | NYSEAMER |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 11,826 | $ 5,935 |
Accounts receivable, net | 8,151 | 7,636 |
Other receivables-employee retention credit (ERC) | 1,028 | |
Inventories, net | 20,620 | 23,406 |
Prepaid income taxes | 465 | 483 |
Other current assets | 626 | 383 |
Total current assets | 42,716 | 37,843 |
Property, plant and equipment, net | 11,048 | 12,017 |
Deferred income taxes | 125 | 137 |
Other non-current assets | 324 | 331 |
Total Assets | 54,213 | 50,328 |
Current liabilities: | ||
Current portion of long-term debt | 423 | 2,334 |
Current portion of capitalized loan/lease obligations | 378 | 301 |
Dividend payable | 12 | |
Accounts payable | 1,568 | 1,599 |
Accrued employee compensation and benefits costs | 2,158 | 1,649 |
Other accrued liabilities | 3,553 | 874 |
Total current liabilities | 8,080 | 6,769 |
Long-term debt | 4,829 | 7,293 |
Post retirement obligation | 2,556 | 2,529 |
Shareholders' equity: | ||
Common stock, par value $0.20; authorized 4,000,000 shares; issued 2,614,506 shares; outstanding 2,419,923 (2,416,683 - 2020) shares | 523 | 523 |
Capital in excess of par value | 14,498 | 14,481 |
Retained earnings | 26,768 | 21,803 |
Accumulated other comprehensive loss | (1,310) | (1,356) |
Employee stock ownership trust commitment | (359) | (359) |
Treasury stock, at cost 122,839 (126,079 - 2020) shares | (1,372) | (1,355) |
Total shareholders' equity | 38,748 | 33,737 |
Total Liabilities and Shareholders' Equity | $ 54,213 | $ 50,328 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.20 | $ 0.20 |
Common stock, shares authorized | 4,000,000 | 4,000,000 |
Common stock, shares issued | 2,614,506 | 2,614,506 |
Common stock, shares outstanding | 2,419,923 | 2,416,683 |
Treasury stock, shares | 122,839 | 126,079 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Revenue | $ 10,915,000 | $ 10,297,000 | $ 30,003,000 | $ 39,249,000 | ||||
Costs and expenses: | ||||||||
Costs of goods sold, inclusive of depreciation and amortization | 9,143,000 | 10,462,000 | 25,366,000 | 31,682,000 | ||||
Gross margin income/(loss) | 1,772,000 | (165,000) | 4,637,000 | 7,567,000 | ||||
Operating Expenses: | ||||||||
Selling, general and administrative | 2,721,000 | 2,096,000 | 6,903,000 | 6,112,000 | ||||
Legal settlement awards | 1,890,000 | 1,890,000 | ||||||
Total operating expenses | 4,611,000 | 2,096,000 | 8,793,000 | 6,112,000 | ||||
Operating (loss)/income | (2,839,000) | (2,261,000) | (4,156,000) | 1,455,000 | ||||
Other income/(expense): | ||||||||
Employee retention credit (ERC) | 1,978,000 | 5,622,000 | ||||||
Gain on Paycheck Protection Program loan forgiveness | 4,000,000 | 4,000,000 | ||||||
Interest expense | (5,000) | (42,000) | (132,000) | (134,000) | ||||
Total other income/(expense) | 5,973,000 | (42,000) | 9,490,000 | (134,000) | ||||
Income/(loss) before income tax provision | 3,134,000 | (2,303,000) | 5,334,000 | 1,321,000 | ||||
Income tax (benefit)/ provision | (104,000) | (521,000) | 369,000 | 240,000 | ||||
Net income/(loss) | $ 3,238,000 | $ 1,186,000 | $ 541,000 | $ (1,782,000) | $ 965,000 | $ 1,898,000 | $ 4,965,000 | $ 1,081,000 |
Basic | ||||||||
Net income (loss) per share | $ 1.34 | $ (0.75) | $ 2.07 | $ 0.46 | ||||
Diluted | ||||||||
Net income (loss) per share | $ 1.34 | $ (0.75) | $ 2.06 | $ 0.45 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income/(loss) | $ 3,238 | $ (1,782) | $ 4,965 | $ 1,081 |
Other comprehensive income items: | ||||
Actuarial gain | 19 | 58 | ||
Income tax expense on actuarial gain | (4) | (12) | ||
Other comprehensive income: | ||||
Retirement benefits adjustment | 15 | 46 | ||
Total comprehensive income (loss) | $ 3,253 | $ (1,782) | $ 5,011 | $ 1,081 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows related to operating activities: | ||
Net Income | $ 4,965,000 | $ 1,081,000 |
Adjustments to reconcile net income to net cash generated/(used) by operating activities: | ||
Paycheck Protection Program loan forgiveness | (4,000,000) | |
Depreciation and amortization | 1,043,000 | 1,072,000 |
Stock based compensation | 81,000 | 255,000 |
Gain on disposal of property | (1,000) | |
Decrease in doubtful accounts | (34,000) | (150,000) |
(Decrease)/increase in inventory reserve | (75,000) | 240,000 |
Increase/(decrease) in warranty reserve | 14,000 | (133,000) |
Deferred income taxes | 12,000 | |
Change in assets and liabilities: | ||
Accounts receivable | (481,000) | 6,564,000 |
Other receivables: employee retention credit | (1,028,000) | |
Inventories | 2,861,000 | (5,242,000) |
Prepaid income taxes | 18,000 | (352,000) |
Other current assets | (242,000) | (148,000) |
Other non-current assets | 1,000 | |
Accounts payable | (31,000) | (1,213,000) |
Dividends payable | (12,000) | (1,000) |
Accrued employee compensation and benefit costs | 509,000 | 6,000 |
Other accrued liabilities | 2,665,000 | 147,000 |
Postretirement benefits | 73,000 | |
Net cash generated by operating activities | 6,338,000 | 2,126,000 |
Cash flows related to investing activities: | ||
Capital expenditures - property, plant and equipment | (68,000) | (708,000) |
Net cash (used) by investing activities | (68,000) | (708,000) |
Cash flows related to financing activities: | ||
Principal payments on long-term debt | (911,000) | (410,000) |
Principal payments on equipment financing lease obligations | (271,000) | (220,000) |
Proceeds from equipment note and equipment financing lease obligations | 384,000 | |
Proceeds from the line of credit | 500,000 | 750,000 |
Purchase of treasury shares | (81,000) | (100,000) |
Proceeds from Paycheck Protection Program | 4,000,000 | |
Net cash (used) generated by financing activities | (379,000) | 4,020,000 |
Net increase in cash | 5,891,000 | 5,438,000 |
Cash at beginning of period | 5,935,000 | 2,029,000 |
Cash at end of period | $ 11,826,000 | $ 7,467,000 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2021 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements (“consolidated financial statements”) have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. The accompanying consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The consolidated financial statements should be read in conjunction with the 2020 annual report and the notes thereto. |
Business Description and Summar
Business Description and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Business Description and Summary of Significant Accounting Policies | |
Business Description and Summary of Significant Accounting Policies | 2. Business Description and Summary of Significant Accounting Policies Business Description Servotronics, Inc. and its subsidiaries design, manufacture and market advanced technology products consisting primarily of control components, and consumer products consisting of knives and various types of cutlery and other edged products. Principles of Consolidation The consolidated financial statements include the accounts of Servotronics, Inc. and its wholly-owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated upon consolidation. Cash The Company considers cash to include all currency and coins owned by the Company as well as all deposits in the bank including checking accounts and savings accounts. Accounts Receivable The Company grants credit to substantially all of its customers and carries its accounts receivable at original invoice amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on history of past write-offs, collections, and current credit conditions. The allowance for doubtful accounts amounted to approximately $154,000 at September 30, 2021 and $188,000 at December 31, 2020. The Company does not accrue interest on past due receivables. Revenue Recognition Revenues are recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Our revenue transactions generally consist of a single performance obligation to transfer contracted goods and are not accounted for under industry-specific guidance. Purchase orders generally include specific terms relative to quantity, item description, specifications, price, customer responsibility for in-process costs, delivery schedule, shipping point, payment and other standard terms and conditions of purchase. Service sales, principally representing repair, are recognized at the time of shipment of goods. The costs incurred for nonrecurring engineering, development and repair activities of our products under agreements with commercial customers are expensed as incurred. Subsequently, the revenue is recognized as products are delivered to the customers with the approval by the customers. Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods and services to a customer. The Company determines revenue recognition using the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when the company satisfies a performance obligation. Revenue excludes taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (e.g., sales and use taxes). Revenue includes payments for shipping activities that are reimbursed by the customer to the Company. Performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As a significant portion of the Company’s revenue are recognized at the time of shipment, transfer of title and customer acceptance, there is no significant judgment applied to determine the timing of the satisfaction of performance obligations or transaction price. The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment. The Company generally receives payment for these contracts within the payment terms negotiated and agreed upon by each customer contract. Warranty and repair obligations are assessed on all returns. Revenue is not recorded on any warranty returns. The Company warrants its products against design, materials and workmanship based on an average of twenty-seven months. The Company determines warranty reserves needed based on actual average costs of warranty units shipped and current facts and circumstances. As of September 30, 2021 and December 31, 2020 under the guidance of ASC460 the Company has recorded a warranty reserve of approximately $396,000 and $382,000, respectively. This amount is reflected in other accrued expenses in the accompanying consolidated balance sheets. Revenue is recognized on repair returns, covered under a customer contract, at the contractual price upon shipment to the customer. Inventories Inventories are stated at the lower of cost or net realizable value. Cost includes all costs incurred to bring each product to its present location and condition. Market provisions in respect of lower of cost or market adjustments and inventory expected to be used in greater than two years are applied to the gross value of the inventory through a reserve of approximately $1,645,000 and $1,720,000 at September 30, 2021 and December 31, 2020, respectively. Pre-production and start-up costs are expensed as incurred. The purchase of suppliers’ minimum economic quantities of material such as steel, etc. may result in a purchase of quantities exceeding one year of customer requirements. Also, in order to maintain a reasonable and/or agreed to lead time, certain larger quantities of other product support items may have to be purchased and may result in over one year’s supply. These amounts are not included in the inventory reserve discussed above. Shipping and Handling Costs Shipping and handling costs are classified as a component of cost of goods sold. Property, Plant and Equipment Property, plant and equipment is carried at cost; expenditures for new facilities and equipment and expenditures which substantially increase the useful lives of existing plant and equipment are capitalized; expenditures for maintenance and repairs are expensed as incurred. Upon disposal of properties, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is included in income. Depreciation is provided on the basis of estimated useful lives of depreciable properties, primarily by the straight-line method for financial statement purposes and by accelerated methods for income tax purposes. Depreciation expense includes the amortization of right-of-use (“ROU”) assets accounted for as finance leases. The estimated useful lives of depreciable properties are generally as follows: Buildings and improvements 5-40 years Machinery and equipment 5-20 years Tooling 3‑5 years Income Taxes For the Nine Months Ended September 30, 2021 2020 % Change ($000’s omitted) Income Tax Expense $ 369 $ 240 53.8 % Effective tax rate 6.9 % 18.2 % (62.1) % The decrease in the effective tax rate during the nine months ended September 30, 2021 was primarily due to a decrease in permanent deductible expenses, primarily the PPP loan forgiveness and other permanent differences. In addition, there are other permanent deductions that decreased the effective tax rate and our investments in research and development has increased the R&D credit. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities, as well as operating loss and credit carryforwards. The Company and its subsidiaries file a consolidated federal income tax return, combined New York, Texas, California and Connecticut state income tax returns and a separate Arkansas state income tax return. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company did not have any accrued interest or penalties included in its consolidated balance sheets at September 30, 2021 or December 31, 2020, and did not recognize any interest and/or penalties in its consolidated statements of income and (loss) during the three and nine months ended September 30, 2021 and 2020. The Company did not have any material uncertain tax positions or unrecognized tax benefits or obligations as of September 30, 2021 and December 31, 2020. The 2017 through 2020 federal and state tax returns remain subject to examination. Supplemental Cash Flow Information Income taxes paid during the nine months ended September 30, 2021 and 2020 amounted to approximately $345,000 and $425,000, respectively. Interest paid during the nine months ended September 30, 2021 and 2020 amounted to approximately $110,000 and $116,000, respectively. Employee Stock Ownership Plan Contributions to the employee stock ownership plan are determined annually by the Company according to plan formula. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable based on undiscounted future operating cash flow analyses. If an impairment is determined to exist, any related impairment loss is calculated based on fair value. Due to the losses incurred by our Consumer Products Group (“CPG”), we performed a test for recoverability of the long-lived assets by comparing its carrying value to the future undiscounted cash flows that we expect will be generated by the asset group. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. The Company has determined that no impairment of long-lived assets existed at September 30, 2021 and December 31, 2020. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain balances, as previously reported, were reclassified to conform to classifications adopted in the current period. Research and Development Costs Research and development costs are expensed as incurred. Concentration of Credit Risks Financial instruments that potentially subject the Company to concentration of credit risks principally consist of cash accounts in financial institutions. Although the accounts exceed the federally insured deposit amount, management does not anticipate nonperformance by the financial institutions. Fair Value of Financial Instruments The carrying amount of cash, accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on variable interest rates and the borrowing rates currently available to the Company for loans similar to its long-term debt, the fair value approximates its carrying amount. Recent Accounting Pronouncements Adopted We consider the applicability and impact of all accounting standards updates (ASUs). Recent ASUs were assessed and determined to be either not applicable, or had and are expected to have minimal impact on our financial statements and related disclosures. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2021 | |
Inventories | |
Inventories | 3. Inventories September 30, December 31, 2021 2020 ($000’s omitted) Raw material and common parts $ 16,266 $ 16,989 Work-in-process 2,760 4,273 Finished goods 3,239 3,864 22,265 25,126 Less inventory reserve (1,645) (1,720) Total inventories $ 20,620 $ 23,406 |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment | |
Property, Plant and Equipment | 4. Property, Plant and Equipment September 30, December 31, 2021 2020 ($000’s omitted) Land $ 7 $ 7 Buildings 11,363 11,359 Machinery, equipment and tooling 21,193 21,146 Construction in progress 215 198 32,778 32,710 Less accumulated depreciation and amortization (21,730) (20,693) Total property, plant and equipment $ 11,048 $ 12,017 Depreciation and amortization expense amounted to approximately $329,000 and $356,000 for the three months ended September 30, 2021 and 2020, respectively. Amortization expense primarily related to ROU assets amounted to approximately $8,000 and $15,000 for the three months ended September 30, 2021 and 2020, respectively. Depreciation and amortization expense amounted to approximately $1,043,000 and $1,072,000 for the nine months ended September 30, 2021 and 2020, respectively. Amortization expense, primarily related to ROU assets, amounted to approximately $42,000 and $50,000 for the nine months ended September 30, 2021 and 2020, respectively. The Company maintains property and casualty insurance in amounts adequate for the risk and nature of its assets and operations and which are generally customary in its industry. As of September 30, 2021, there is approximately $215,000 ($198,000 – December 31, 2020) of construction in progress (CIP) included in property, plant and equipment all of which is related to capital projects. There is approximately $214,000 for machinery & equipment and self-constructed assets ($191,000 – December 2020), $0 for computer equipment ($7,000 – December 2020) and $1,000 for building improvements ($0 – December 2020) primarily related to the at the Advanced Technology Group. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Long-Term Debt | |
Long-Term Debt | 5. Long-Term Debt September 30, December 31, 2021 2020 ($000’s omitted) Paycheck protection progam payable to financial institutions: Interest rate of 1% per annum. Unforgiven portion is payable monthly until April 20, 2022 (A) $ — $ 4,000 Line of credit payable to a financial institution; Interest rate option of bank prime or Libor plus 2.15% (B)(C) 4,250 3,750 Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.486%, monthly principle payments of $21,833 through 2021 with a balloon payment of $286,000 due December 1, 2021(C). 352 1,048 Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.486%, monthly principal payments of $23,810 through December 1, 2021 (C). 71 286 Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender’s lease pricing at time of funding. Interest rate/factor 1.795535% - 1.835015% as of September 30, 2021.(D) 765 534 Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/ factor 1.822758% - 1.869304% at time of funding)(E) 192 310 5,630 9,928 Less current portion (801) (2,635) Long-term debt $ 4,829 $ 7,293 A.) On April 21, 2020, the Company executed a promissory note (the “Note”) in the amount of $4,000,000 as part of the Paycheck Protection Program (the “PPP Loan”) administered by the Small Business Administration (the “SBA”) and authorized under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan is being made through the Bank of America, NA (the “Lender”). The term of the PPP Loan is two years with an annual interest rate of 1.00%. Payments on the unforgiven amount of principal, if any, and interest on the PPP Loan will be deferred until the date on which loan forgiveness is determined or 10 months after the end of the borrower’s covered period if forgiveness is not requested. The Company used approximately 60% of the PPP Loan proceeds to pay for payroll costs and the balance on other eligible qualifying expenses consistent with the terms of the PPP and submitted its forgiveness application to the Lender during the third quarter of 2021. During the third quarter, the entire loan in the amount of $4,000,000 and the accrued interest of $57,000 was forgiven by the SBA and a gain of $4,057,000 was recorded in “Other income/(expense)” in the Company’s condensed consolidated statements of operations. B.) The Company has a $6,000,000 line of credit. The interest rate is a rate per year is equal to the bank’s prime rate or Libor plus 2.15%. In addition, the Company is required to pay a commitment fee of 0.25% per year on the unused portion of the line of credit. There was $4,250,000 balance outstanding at September 30, 2021 and $3,750,000 balance at December 31, 2020. C.) The term loans and line of credit are secured by all personal property of the Company with the exception of certain equipment that was purchased from proceeds of government grants. Certain lenders require the Company to comply with debt covenants as described in the specific loan documents, including a debt service ratio. At September 30, 2021 and December 31, 2020 the Company was in compliance with these covenants. D.) The Company had an equipment loan facility in the amount of $1,000,000 available until July 9, 2021. This line is non-revolving and non-renewable. The loan term for the equipment covered by the agreement is 60 months . Monthly payments are fixed for the term of each funding based upon the Lender’s lease pricing in effect at the time of such funding. During the nine months ended September 30, 2021, approximately $384,000 was drawn on this facility. There was approximately $765,000 outstanding at September 30, 2021 and $534,000 balance outstanding at December 31, 2020. E.) The Company established a lease line of credit for equipment financing in the amount of $1,000,000 available until June 28, 2018. This line was non-revolving and non-renewable. The lease term for equipment covered by the lease line of credit is 60 months . Monthly payments are fixed for the term of each funding based upon the Lender’s lease pricing in effect at the time of such funding. There was approximately $192,000 outstanding at September 30, 2021 and $310,000 at December 31, 2020. Remaining principal maturities of long-term debt are as follows: 2021 - $524,000, 2022 - $4,614,000, 2023 - $231,000, 2024 - $178,000, 2025 - $77,000 and 2026 - $6,000. Remaining principal payments and interest payments for the capital note and capital equipment financing lease obligations for each of the next five years: September 30, December 31, Year 2021 2020 ($000’s omitted) 2021 $ 137 $ 331 2022 393 316 2023 246 169 2024 188 112 2025+ 90 — Total principal and interest payments 1,054 928 Less amount representing interest (97) (83) Present value of net minimum lease payments 957 845 Less current portion (378) (301) Long-term principle payments $ 579 $ 544 |
Postretirement Benefit Plan
Postretirement Benefit Plan | 9 Months Ended |
Sep. 30, 2021 | |
Postretirement Benefit Plan | |
Postretirement Benefit Plan | 6. Postretirement Benefit Plan The Company provides certain postretirement health and life insurance benefits for the Company’s Chief Executive Officer and President, and a former executive of the Company (the Plan). Upon retirement and after attaining at least the age of 65, the Company will pay the annual cost of health insurance coverage and provide life insurance offered at the time of retirement. The Plan also provides a benefit to reimburse the participants of certain out-of-pocket medical or health related expenses. The retirees’ insurance benefits cease upon the death of the retired executive. The Plan is unfunded and the projected benefit obligation is actuarially determined on an annual basis as of December 31. Quarterly projections are developed from the annual actuarial valuation as adjusted for actual benefit costs during the quarter. Inherent in these valuations are key assumptions, including the discount rate and expected service and interest costs. As of September 30, 2021 and December 31, 2020 the future accumulated postretirement benefit obligation was approximately $2,556,000 and $2,529,000, respectively and has been accrued and reflected in Post Retirement Obligation in the accompanying condensed consolidated balance sheets. Benefit cost for the three months ended September 30, 2021 and 2020 totaled $48,000 and $98,000, respectively. Benefit costs for the nine months ended September 30, 2021 and 2020 totaled $143,000 and $296,000, respectively. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2021 | |
Shareholders' Equity | |
Shareholders' Equity | 7. Shareholders’ Equity Nine-month Period Ended September 30, 2021 Accumulated Other Capital in Total Retained Comprehensive excess of Treasury shareholders’ Earnings Income Common Stock par value ESOT stock equity December 31, 2020 $ 21,803 $ (1,356) $ 523 $ 14,481 $ (359) $ (1,355) $ 33,737 Retirement benefits adjustment — 15 — — — — 15 Stock based compensation — — — 11 — 20 31 Purchase of treasury shares — — — — — (81) (81) Net Income 541 — — — — — 541 March 31, 2021 $ 22,344 $ (1,341) $ 523 $ 14,492 $ (359) $ (1,416) $ 34,243 Retirement benefits adjustment — 16 — — — — 16 Stock based compensation — — — 5 — 20 25 Net Income 1,186 — — — — — 1,186 June 30, 2021 $ 23,530 $ (1,325) $ 523 $ 14,497 $ (359) $ (1,396) $ 35,470 Retirement benefits adjustment — 15 — — — — 15 Stock based compensation — — — 1 — 24 25 Net Income 3,238 — — — — — 3,238 September 30, 2021 $ 26,768 $ (1,310) $ 523 $ 14,498 $ (359) $ (1,372) $ 38,748 Nine-month Period Ended September 30, 2020 Accumulated Other Capital in Total Retained Comprehensive excess of Treasury shareholders’ Earnings Income Common Stock par value ESOT stock equity December 31, 2019 $ 20,484 $ 98 $ 523 $ 14,358 $ (460) $ (1,471) $ 33,532 Stock based compensation — — — 33 — 52 85 Purchase of treasury shares — — — — — (100) (100) Net Income 1,898 — — — — — 1,898 March 31, 2020 $ 22,382 $ 98 $ 523 $ 14,391 $ (460) $ (1,519) $ 35,415 Stock based compensation — — — 39 — 48 87 Net Income 965 — — — — — 965 June 30, 2020 $ 23,347 $ 98 $ 523 $ 14,430 $ (460) $ (1,471) $ 36,467 Stock based compensation — — — 29 — 54 83 Net Loss (1,782) — — — — — (1,782) September 30, 2020 $ 21,565 $ 98 $ 523 $ 14,459 $ (460) $ (1,417) $ 34,768 The Company’s Board of Directors authorized the purchase of up to 450,000 shares of its common stock in the open market or in privately negotiated transactions. As of September 30, 2021, the Company has purchased 360,615 shares and there remains 89,385 shares available to purchase under this program. There were no shares and 360 shares purchased by the Company during the nine month period ended September 30, 2021 and 2020, respectively. On January 1, 2021, 25,250 shares of restricted stock vested of which 9,920 shares were withheld by the Company for approximately $81,000 to satisfy statutory minimum withholding tax requirements for those participants who elected this option as permitted under the applicable equity plan. The Company’s director compensation policy provides that non-employee directors receive a portion of their annual retainer in the form of restricted stock under the Company’s 2012 Long-Term Incentive Plan. These shares vest quarterly over a twelve month service period, have voting rights and accrue dividends that are paid upon vesting. The aggregate amount of expense to the Company, measured based on the grant date fair value, will be recognized over the requisite service period. An aggregate of 13,160 restricted shares were issued on August 13, 2021 with a grant date fair value of $100,000. Included in nine months ended September 30, 2021 and December 31, 2020 is approximately $75,000 and $336,000, respectively, of stock-based compensation expense related to the restrictive share awards. Weighted Average Grant Date Fair Shares Value Unvested at December 31, 2020 30,914 $ 9.24 Granted 13,160 7.60 Vested 34,206 9.08 Unvested at September 30, 2021 9,868 $ 7.60 Earnings Per Share Basic earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period. The weighted average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding, are considered forfeitable until the restrictions lapse and will not be included in the basic EPS calculation until the shares are vested. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period plus the number of shares of common stock that would be issued assuming all contingently issuable shares having a dilutive effect on the earnings per share that were outstanding for the period. Incremental shares from assumed conversions are calculated as the number of shares that would be issued, net of the number of shares that could be purchased in the marketplace with the cash received upon stock option exercise. The dilutive effect of unvested restrictive stock is determined using the treasury stock method. Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 ($000’s omitted except per share data) Net (Loss) Income $ 3,238 $ (1,782) $ 4,965 $ 1,081 Weighted average common shares outstanding (basic) 2,410 2,363 2,404 2,358 Unvested restricted stock 10 34 10 34 Weighted average common shares outstanding (diluted) 2,420 2,397 2,414 2,392 Basic Net (loss) income per share $ 1.34 $ (0.75) $ 2.07 $ 0.46 Diluted Net (loss) income per share $ 1.34 $ (0.75) $ 2.06 $ 0.45 |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2021 | |
Litigation | |
Litigation | 8. Litigation In the course of its business, the Company is subject to a variety of claims and lawsuits that are inherently subject to many uncertainties regarding the possibility of a loss to the Company. Because litigation outcomes are inherently unpredictable, the Company’s evaluation of legal proceedings often involves a series of complex assessments by management, after consulting with legal counsel, about future events and can rely heavily on estimates and assumptions. The Company carries liability insurance, subject to certain deductibles and policy limits, for such claims as they arise and may from time to time establish reserves for litigation that is considered probable of a loss. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. The Company has pending litigation relative to leases of certain equipment and real property with a former related party. Aero, Inc. sued Servotronics, Inc. and its wholly owned subsidiary and alleged damages in the amount of $3,000,000. The Company has filed a response to the Aero, Inc. lawsuit and has also filed a counter-claim in the amount of $3,191,000. Substantive settlement negotiations commenced in September 2021 with respect to these claims. In prior quarters, the Company did not consider the risk of loss to be probable and was unable to reasonably or accurately estimate the likelihood and amount of any liability or benefit that may be realized as a result of this litigation. While these negotiations have not progressed to the point of a final, binding settlement as of the date of this Quarterly Report on Form 10-Q, the Company recorded a charge of $1,800,000 associated with the proposed settlement as of September 30, 2021. This amount is reflected in other accrued liabilities in the accompanying condensed consolidated balance sheet. The Company has pending litigation relative to a dispute for work performed by an independent contractor and the use of tooling to perform the necessary work for the Company’s wholly-owned subsidiary, The Ontario Knife Company. Alleged damages was in the amount of $750,000. Substantive settlement negotiations commenced in September 2021 with respect to these claims. In prior quarters, the Company did not consider the risk of loss to be probable and was unable to reasonably or accurately estimate the likelihood and amount of any liability or benefit that may be realized as a result of this litigation. While these negotiations have not progressed to the point of a final, binding settlement as of the date of this Quarterly Report on Form 10-Q, the Company recorded a charge of $90,000 associated with the proposed settlement as of September 30, 2021. This amount is reflected in other accrued liabilities in the accompanying condensed consolidated balance sheet. On June 7, 2021, a Summons and Complaint was filed by an employee in the Supreme Court of the State of New York, County of Erie, against Servotronics, Inc., the Servotronics Board of Directors, The Ontario Knife Company and Kenneth D. Trbovich (collectively, the “Defendants”). The Complaint alleges certain violations under the New York Human Rights Law by the Defendants relating to the employee’s employment by the Company as well as intentional and negligent infliction of emotional distress. The complaint also alleges certain purported derivative causes of action against all Defendants, including breach of fiduciary duties, fraud and corporate waste. The complaint seeks monetary damages in an amount not less than $5,000,000 with respect to the direct causes of action and equitable relief with respect to the purported derivative causes of action. The Defendants filed a motion to dismiss the Complaint on August 6, 2021. This litigation is still in its earliest stages. Based on the information known by the Company as of the date of this filing, the Company does not consider the risk of loss to be probable and is unable to reasonably or accurately estimate the likelihood and amount of any liability that may be realized as a result of this litigation. Accordingly, no loss has been recognized in the accompanying financials statements related to this litigation. The Company intends to vigorously defend against this litigation. There are no other legal proceedings currently pending by or against the Company other than ordinary routine litigation incidental to the business which is not expected to have a material adverse effect on the business or earnings of the Company. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions | |
Related Party Transactions | 9. Related Party Transactions The Company paid legal fees and disbursements of approximately $59,000 and $150,000 in the nine month period ended September 30, 2021 and 2020, respectively, for services provided by a law firm that is owned by a member of the Company’s Board of Directors. Legal fees paid for the three month period ended September 30, 2021 and 2020 amounted to approximately $13,000 and $18,000, respectively. Additionally, the Company had accrued unbilled legal fees at September 30, 2021 and 2020 of approximately $13,000 and $25,000, respectively, with this firm. |
Employee Retention Credit
Employee Retention Credit | 9 Months Ended |
Sep. 30, 2021 | |
Employee Retention Credit | |
Employee Retention Credit [Text Block] | 10. Employee Retention Credit The employee retention credit (ERC) for 2020 was established under the CARES Act and amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the “Relief Act”) provided for changes in the employee retention credit for 2020 and provided an additional credit for the first, second and third calendar quarters of 2021. The Company evaluated its eligibility for the employee retention credit for the three months ending September 30, 2021. In order to qualify for the ERC in the third quarter of 2021, the Company needed to experience a 20% reduction in gross receipts from either (1) the same quarter in 2019 or (2) the immediate preceding quarter to the corresponding calendar quarter in 2019. It was determined that the Company qualified for the employee retention credit under scenario (2) for September 30, 2021. As a result, for the three month and nine month periods ending September 30, 2021 approximately $1,978,000 and $5,622,000, respectively was recognized in other income for the employee retention credit. |
Business Segments
Business Segments | 9 Months Ended |
Sep. 30, 2021 | |
Business Segments | |
Business Segments | 11. Business Segments The Company operates in two business segments, ATG and CPG. The Company’s reportable segments are strategic business units that offer different products and services. The segments are composed of separate corporations and are managed separately. Operations in ATG primarily involve the design, manufacture, and marketing of servo-control components (i.e., torque motors, control valves, actuators, etc.) for government, commercial and industrial applications. CPG’s operations involve the design, manufacture and marketing of a variety of cutlery products for use by consumers and government agencies. The Company derives its primary sales revenue from domestic customers, although a portion of finished products are for foreign end use. As of September 30, 2021, the Company had identifiable assets of approximately $54,213,000 ($50,328,000 – December 31, 2020) of which approximately $44,784,000 ($40,826,000 – December 31, 2020) was for ATG and approximately $9,429,000 ($9,502,000 – December 31, 2020) was for CPG. Information regarding the Company’s operations in these segments is summarized as follows: ($000’s omitted except per share data) ATG CPG Consolidated Nine Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, 2021 2020 2021 2020 2021 2020 Revenues from unaffiliated customers $ 23,495 $ 33,228 $ 6,508 $ 6,021 $ 30,003 $ 39,249 Cost of goods sold, inclusive of depreciation (19,214) (26,495) (6,152) (5,187) (25,366) (31,682) Gross margin 4,281 6,733 356 834 4,637 7,567 Gross margin % 18.2 % 20.3 % 5.5 % 13.9 % 15.5 % 19.3 % Selling, general and administrative (5,586) (4,857) (1,317) (1,255) (6,903) (6,112) Legal settlement awards (1,800) — (90) — (1,890) — Total operating costs and expenses (26,600) (31,352) (7,559) (6,442) (34,159) (37,794) Operating (loss)/income (3,105) 1,876 (1,051) (421) (4,156) 1,455 Employee retention credit (ERC) 4,584 — 1,038 — 5,622 — Paycheck Protection Program loan forgiveness 4,000 — — 4,000 — Interest expense (130) (125) (2) (9) (132) (134) Total other income (expense) 8,454 (125) 1,036 (9) 9,490 (134) Income (loss) before income tax provision 5,349 1,751 (15) (430) 5,334 1,321 Income tax provision (benefit) 370 318 (1) (78) 369 240 Net income (loss) $ 4,979 $ 1,433 $ (14) $ (352) $ 4,965 $ 1,081 Capital expenditures $ 64 $ 640 $ 4 $ 68 $ 68 $ 708 ($000’s omitted except per share data) ATG CPG Consolidated Three Months Ended Three Months Ended Three Months Ended September 30, September 30, September 30, 2021 2020 2021 2020 2021 2020 Revenues from unaffiliated customers $ 8,449 $ 8,184 $ 2,466 $ 2,113 $ 10,915 $ 10,297 Cost of goods sold, inclusive of depreciation (6,762) (8,635) (2,381) (1,827) (9,143) (10,462) Gross margin 1,687 (451) 85 286 1,772 (165) Gross margin % 20.0 % (5.5) % 3.4 % 13.5 % 16.2 % (1.6) % Selling, general and administrative (2,240) (1,712) (481) (384) (2,721) (2,096) Legal settlement awards (1,800) — (90) — (1,890) — Total operating costs and expenses (10,802) (10,347) (2,952) (2,211) (13,754) (12,558) Operating loss (2,353) (2,163) (486) (98) (2,839) (2,261) Employee retention credit (ERC) 1,598 — 380 — 1,978 — Paycheck Protection Program loan forgiveness 4,000 — — — 4,000 — Interest expense (5) (41) — (1) (5) (42) Total other income (expense) 5,593 (41) 380 (1) 5,973 (42) Income (loss) before income tax provision 3,240 (2,204) (106) (99) 3,134 (2,303) Income tax benefit (83) (512) (21) (9) (104) (521) Net income (loss) $ 3,323 $ (1,692) $ (85) $ (90) $ 3,238 $ (1,782) Capital expenditures $ 54 $ 99 $ 1 $ 16 $ 55 $ 115 |
Business Description and Summ_2
Business Description and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Business Description and Summary of Significant Accounting Policies | |
Business Description | Business Description Servotronics, Inc. and its subsidiaries design, manufacture and market advanced technology products consisting primarily of control components, and consumer products consisting of knives and various types of cutlery and other edged products. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Servotronics, Inc. and its wholly-owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated upon consolidation. |
Cash | Cash The Company considers cash to include all currency and coins owned by the Company as well as all deposits in the bank including checking accounts and savings accounts. |
Accounts Receivable | Accounts Receivable The Company grants credit to substantially all of its customers and carries its accounts receivable at original invoice amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on history of past write-offs, collections, and current credit conditions. The allowance for doubtful accounts amounted to approximately $154,000 at September 30, 2021 and $188,000 at December 31, 2020. The Company does not accrue interest on past due receivables. |
Revenue Recognition | Revenue Recognition Revenues are recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Our revenue transactions generally consist of a single performance obligation to transfer contracted goods and are not accounted for under industry-specific guidance. Purchase orders generally include specific terms relative to quantity, item description, specifications, price, customer responsibility for in-process costs, delivery schedule, shipping point, payment and other standard terms and conditions of purchase. Service sales, principally representing repair, are recognized at the time of shipment of goods. The costs incurred for nonrecurring engineering, development and repair activities of our products under agreements with commercial customers are expensed as incurred. Subsequently, the revenue is recognized as products are delivered to the customers with the approval by the customers. Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods and services to a customer. The Company determines revenue recognition using the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when the company satisfies a performance obligation. Revenue excludes taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (e.g., sales and use taxes). Revenue includes payments for shipping activities that are reimbursed by the customer to the Company. Performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As a significant portion of the Company’s revenue are recognized at the time of shipment, transfer of title and customer acceptance, there is no significant judgment applied to determine the timing of the satisfaction of performance obligations or transaction price. The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment. The Company generally receives payment for these contracts within the payment terms negotiated and agreed upon by each customer contract. Warranty and repair obligations are assessed on all returns. Revenue is not recorded on any warranty returns. The Company warrants its products against design, materials and workmanship based on an average of twenty-seven months. The Company determines warranty reserves needed based on actual average costs of warranty units shipped and current facts and circumstances. As of September 30, 2021 and December 31, 2020 under the guidance of ASC460 the Company has recorded a warranty reserve of approximately $396,000 and $382,000, respectively. This amount is reflected in other accrued expenses in the accompanying consolidated balance sheets. Revenue is recognized on repair returns, covered under a customer contract, at the contractual price upon shipment to the customer. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost includes all costs incurred to bring each product to its present location and condition. Market provisions in respect of lower of cost or market adjustments and inventory expected to be used in greater than two years are applied to the gross value of the inventory through a reserve of approximately $1,645,000 and $1,720,000 at September 30, 2021 and December 31, 2020, respectively. Pre-production and start-up costs are expensed as incurred. The purchase of suppliers’ minimum economic quantities of material such as steel, etc. may result in a purchase of quantities exceeding one year of customer requirements. Also, in order to maintain a reasonable and/or agreed to lead time, certain larger quantities of other product support items may have to be purchased and may result in over one year’s supply. These amounts are not included in the inventory reserve discussed above. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs are classified as a component of cost of goods sold. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is carried at cost; expenditures for new facilities and equipment and expenditures which substantially increase the useful lives of existing plant and equipment are capitalized; expenditures for maintenance and repairs are expensed as incurred. Upon disposal of properties, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is included in income. Depreciation is provided on the basis of estimated useful lives of depreciable properties, primarily by the straight-line method for financial statement purposes and by accelerated methods for income tax purposes. Depreciation expense includes the amortization of right-of-use (“ROU”) assets accounted for as finance leases. The estimated useful lives of depreciable properties are generally as follows: Buildings and improvements 5-40 years Machinery and equipment 5-20 years Tooling 3‑5 years |
Income Taxes | Income Taxes For the Nine Months Ended September 30, 2021 2020 % Change ($000’s omitted) Income Tax Expense $ 369 $ 240 53.8 % Effective tax rate 6.9 % 18.2 % (62.1) % The decrease in the effective tax rate during the nine months ended September 30, 2021 was primarily due to a decrease in permanent deductible expenses, primarily the PPP loan forgiveness and other permanent differences. In addition, there are other permanent deductions that decreased the effective tax rate and our investments in research and development has increased the R&D credit. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities, as well as operating loss and credit carryforwards. The Company and its subsidiaries file a consolidated federal income tax return, combined New York, Texas, California and Connecticut state income tax returns and a separate Arkansas state income tax return. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company did not have any accrued interest or penalties included in its consolidated balance sheets at September 30, 2021 or December 31, 2020, and did not recognize any interest and/or penalties in its consolidated statements of income and (loss) during the three and nine months ended September 30, 2021 and 2020. The Company did not have any material uncertain tax positions or unrecognized tax benefits or obligations as of September 30, 2021 and December 31, 2020. The 2017 through 2020 federal and state tax returns remain subject to examination. |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Income taxes paid during the nine months ended September 30, 2021 and 2020 amounted to approximately $345,000 and $425,000, respectively. Interest paid during the nine months ended September 30, 2021 and 2020 amounted to approximately $110,000 and $116,000, respectively. |
Employee Stock Ownership Plan | Employee Stock Ownership Plan Contributions to the employee stock ownership plan are determined annually by the Company according to plan formula. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable based on undiscounted future operating cash flow analyses. If an impairment is determined to exist, any related impairment loss is calculated based on fair value. Due to the losses incurred by our Consumer Products Group (“CPG”), we performed a test for recoverability of the long-lived assets by comparing its carrying value to the future undiscounted cash flows that we expect will be generated by the asset group. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. The Company has determined that no impairment of long-lived assets existed at September 30, 2021 and December 31, 2020. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain balances, as previously reported, were reclassified to conform to classifications adopted in the current period. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
Concentration of Credit Risks | Concentration of Credit Risks Financial instruments that potentially subject the Company to concentration of credit risks principally consist of cash accounts in financial institutions. Although the accounts exceed the federally insured deposit amount, management does not anticipate nonperformance by the financial institutions. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amount of cash, accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on variable interest rates and the borrowing rates currently available to the Company for loans similar to its long-term debt, the fair value approximates its carrying amount. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted We consider the applicability and impact of all accounting standards updates (ASUs). Recent ASUs were assessed and determined to be either not applicable, or had and are expected to have minimal impact on our financial statements and related disclosures. |
Business Description and Summ_3
Business Description and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Description and Summary of Significant Accounting Policies | |
Schedule of estimated useful lives of property, plant and equipment | Buildings and improvements 5-40 years Machinery and equipment 5-20 years Tooling 3‑5 years |
Schedule of income tax expenses and effective tax rate | For the Nine Months Ended September 30, 2021 2020 % Change ($000’s omitted) Income Tax Expense $ 369 $ 240 53.8 % Effective tax rate 6.9 % 18.2 % (62.1) % |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventories | |
Schedule of inventories | September 30, December 31, 2021 2020 ($000’s omitted) Raw material and common parts $ 16,266 $ 16,989 Work-in-process 2,760 4,273 Finished goods 3,239 3,864 22,265 25,126 Less inventory reserve (1,645) (1,720) Total inventories $ 20,620 $ 23,406 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment | |
Schedule of property, plant and equipment | September 30, December 31, 2021 2020 ($000’s omitted) Land $ 7 $ 7 Buildings 11,363 11,359 Machinery, equipment and tooling 21,193 21,146 Construction in progress 215 198 32,778 32,710 Less accumulated depreciation and amortization (21,730) (20,693) Total property, plant and equipment $ 11,048 $ 12,017 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Long-Term Debt | |
Schedule of long-term debt | September 30, December 31, 2021 2020 ($000’s omitted) Paycheck protection progam payable to financial institutions: Interest rate of 1% per annum. Unforgiven portion is payable monthly until April 20, 2022 (A) $ — $ 4,000 Line of credit payable to a financial institution; Interest rate option of bank prime or Libor plus 2.15% (B)(C) 4,250 3,750 Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.486%, monthly principle payments of $21,833 through 2021 with a balloon payment of $286,000 due December 1, 2021(C). 352 1,048 Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.486%, monthly principal payments of $23,810 through December 1, 2021 (C). 71 286 Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender’s lease pricing at time of funding. Interest rate/factor 1.795535% - 1.835015% as of September 30, 2021.(D) 765 534 Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/ factor 1.822758% - 1.869304% at time of funding)(E) 192 310 5,630 9,928 Less current portion (801) (2,635) Long-term debt $ 4,829 $ 7,293 A.) On April 21, 2020, the Company executed a promissory note (the “Note”) in the amount of $4,000,000 as part of the Paycheck Protection Program (the “PPP Loan”) administered by the Small Business Administration (the “SBA”) and authorized under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan is being made through the Bank of America, NA (the “Lender”). The term of the PPP Loan is two years with an annual interest rate of 1.00%. Payments on the unforgiven amount of principal, if any, and interest on the PPP Loan will be deferred until the date on which loan forgiveness is determined or 10 months after the end of the borrower’s covered period if forgiveness is not requested. The Company used approximately 60% of the PPP Loan proceeds to pay for payroll costs and the balance on other eligible qualifying expenses consistent with the terms of the PPP and submitted its forgiveness application to the Lender during the third quarter of 2021. During the third quarter, the entire loan in the amount of $4,000,000 and the accrued interest of $57,000 was forgiven by the SBA and a gain of $4,057,000 was recorded in “Other income/(expense)” in the Company’s condensed consolidated statements of operations. B.) The Company has a $6,000,000 line of credit. The interest rate is a rate per year is equal to the bank’s prime rate or Libor plus 2.15%. In addition, the Company is required to pay a commitment fee of 0.25% per year on the unused portion of the line of credit. There was $4,250,000 balance outstanding at September 30, 2021 and $3,750,000 balance at December 31, 2020. C.) The term loans and line of credit are secured by all personal property of the Company with the exception of certain equipment that was purchased from proceeds of government grants. Certain lenders require the Company to comply with debt covenants as described in the specific loan documents, including a debt service ratio. At September 30, 2021 and December 31, 2020 the Company was in compliance with these covenants. D.) The Company had an equipment loan facility in the amount of $1,000,000 available until July 9, 2021. This line is non-revolving and non-renewable. The loan term for the equipment covered by the agreement is 60 months . Monthly payments are fixed for the term of each funding based upon the Lender’s lease pricing in effect at the time of such funding. During the nine months ended September 30, 2021, approximately $384,000 was drawn on this facility. There was approximately $765,000 outstanding at September 30, 2021 and $534,000 balance outstanding at December 31, 2020. E.) The Company established a lease line of credit for equipment financing in the amount of $1,000,000 available until June 28, 2018. This line was non-revolving and non-renewable. The lease term for equipment covered by the lease line of credit is 60 months . Monthly payments are fixed for the term of each funding based upon the Lender’s lease pricing in effect at the time of such funding. There was approximately $192,000 outstanding at September 30, 2021 and $310,000 at December 31, 2020. |
Schedule of payments for capital lease obligations | September 30, December 31, Year 2021 2020 ($000’s omitted) 2021 $ 137 $ 331 2022 393 316 2023 246 169 2024 188 112 2025+ 90 — Total principal and interest payments 1,054 928 Less amount representing interest (97) (83) Present value of net minimum lease payments 957 845 Less current portion (378) (301) Long-term principle payments $ 579 $ 544 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Shareholders' Equity | |
Schedule of stockholders equity | Nine-month Period Ended September 30, 2021 Accumulated Other Capital in Total Retained Comprehensive excess of Treasury shareholders’ Earnings Income Common Stock par value ESOT stock equity December 31, 2020 $ 21,803 $ (1,356) $ 523 $ 14,481 $ (359) $ (1,355) $ 33,737 Retirement benefits adjustment — 15 — — — — 15 Stock based compensation — — — 11 — 20 31 Purchase of treasury shares — — — — — (81) (81) Net Income 541 — — — — — 541 March 31, 2021 $ 22,344 $ (1,341) $ 523 $ 14,492 $ (359) $ (1,416) $ 34,243 Retirement benefits adjustment — 16 — — — — 16 Stock based compensation — — — 5 — 20 25 Net Income 1,186 — — — — — 1,186 June 30, 2021 $ 23,530 $ (1,325) $ 523 $ 14,497 $ (359) $ (1,396) $ 35,470 Retirement benefits adjustment — 15 — — — — 15 Stock based compensation — — — 1 — 24 25 Net Income 3,238 — — — — — 3,238 September 30, 2021 $ 26,768 $ (1,310) $ 523 $ 14,498 $ (359) $ (1,372) $ 38,748 Nine-month Period Ended September 30, 2020 Accumulated Other Capital in Total Retained Comprehensive excess of Treasury shareholders’ Earnings Income Common Stock par value ESOT stock equity December 31, 2019 $ 20,484 $ 98 $ 523 $ 14,358 $ (460) $ (1,471) $ 33,532 Stock based compensation — — — 33 — 52 85 Purchase of treasury shares — — — — — (100) (100) Net Income 1,898 — — — — — 1,898 March 31, 2020 $ 22,382 $ 98 $ 523 $ 14,391 $ (460) $ (1,519) $ 35,415 Stock based compensation — — — 39 — 48 87 Net Income 965 — — — — — 965 June 30, 2020 $ 23,347 $ 98 $ 523 $ 14,430 $ (460) $ (1,471) $ 36,467 Stock based compensation — — — 29 — 54 83 Net Loss (1,782) — — — — — (1,782) September 30, 2020 $ 21,565 $ 98 $ 523 $ 14,459 $ (460) $ (1,417) $ 34,768 |
Summary of restricted stock activity | Weighted Average Grant Date Fair Shares Value Unvested at December 31, 2020 30,914 $ 9.24 Granted 13,160 7.60 Vested 34,206 9.08 Unvested at September 30, 2021 9,868 $ 7.60 |
Schedule of earnings per share | Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 ($000’s omitted except per share data) Net (Loss) Income $ 3,238 $ (1,782) $ 4,965 $ 1,081 Weighted average common shares outstanding (basic) 2,410 2,363 2,404 2,358 Unvested restricted stock 10 34 10 34 Weighted average common shares outstanding (diluted) 2,420 2,397 2,414 2,392 Basic Net (loss) income per share $ 1.34 $ (0.75) $ 2.07 $ 0.46 Diluted Net (loss) income per share $ 1.34 $ (0.75) $ 2.06 $ 0.45 |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Segments | |
Schedule of information regarding operations in business segment | ($000’s omitted except per share data) ATG CPG Consolidated Nine Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, 2021 2020 2021 2020 2021 2020 Revenues from unaffiliated customers $ 23,495 $ 33,228 $ 6,508 $ 6,021 $ 30,003 $ 39,249 Cost of goods sold, inclusive of depreciation (19,214) (26,495) (6,152) (5,187) (25,366) (31,682) Gross margin 4,281 6,733 356 834 4,637 7,567 Gross margin % 18.2 % 20.3 % 5.5 % 13.9 % 15.5 % 19.3 % Selling, general and administrative (5,586) (4,857) (1,317) (1,255) (6,903) (6,112) Legal settlement awards (1,800) — (90) — (1,890) — Total operating costs and expenses (26,600) (31,352) (7,559) (6,442) (34,159) (37,794) Operating (loss)/income (3,105) 1,876 (1,051) (421) (4,156) 1,455 Employee retention credit (ERC) 4,584 — 1,038 — 5,622 — Paycheck Protection Program loan forgiveness 4,000 — — 4,000 — Interest expense (130) (125) (2) (9) (132) (134) Total other income (expense) 8,454 (125) 1,036 (9) 9,490 (134) Income (loss) before income tax provision 5,349 1,751 (15) (430) 5,334 1,321 Income tax provision (benefit) 370 318 (1) (78) 369 240 Net income (loss) $ 4,979 $ 1,433 $ (14) $ (352) $ 4,965 $ 1,081 Capital expenditures $ 64 $ 640 $ 4 $ 68 $ 68 $ 708 ($000’s omitted except per share data) ATG CPG Consolidated Three Months Ended Three Months Ended Three Months Ended September 30, September 30, September 30, 2021 2020 2021 2020 2021 2020 Revenues from unaffiliated customers $ 8,449 $ 8,184 $ 2,466 $ 2,113 $ 10,915 $ 10,297 Cost of goods sold, inclusive of depreciation (6,762) (8,635) (2,381) (1,827) (9,143) (10,462) Gross margin 1,687 (451) 85 286 1,772 (165) Gross margin % 20.0 % (5.5) % 3.4 % 13.5 % 16.2 % (1.6) % Selling, general and administrative (2,240) (1,712) (481) (384) (2,721) (2,096) Legal settlement awards (1,800) — (90) — (1,890) — Total operating costs and expenses (10,802) (10,347) (2,952) (2,211) (13,754) (12,558) Operating loss (2,353) (2,163) (486) (98) (2,839) (2,261) Employee retention credit (ERC) 1,598 — 380 — 1,978 — Paycheck Protection Program loan forgiveness 4,000 — — — 4,000 — Interest expense (5) (41) — (1) (5) (42) Total other income (expense) 5,593 (41) 380 (1) 5,973 (42) Income (loss) before income tax provision 3,240 (2,204) (106) (99) 3,134 (2,303) Income tax benefit (83) (512) (21) (9) (104) (521) Net income (loss) $ 3,323 $ (1,692) $ (85) $ (90) $ 3,238 $ (1,782) Capital expenditures $ 54 $ 99 $ 1 $ 16 $ 55 $ 115 |
Business Description and Summ_4
Business Description and Summary of Significant Accounting Policies - Estimated useful lives of depreciable properties (Details) | 9 Months Ended |
Sep. 30, 2021 | |
Buildings and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 5 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 40 years |
Machinery, equipment and tooling | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 5 years |
Machinery, equipment and tooling | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 20 years |
Tooling | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 3 years |
Tooling | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 5 years |
Business Description and Summ_5
Business Description and Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Business Description and Summary of Significant Accounting Policies | ||||
Income tax expense | $ (104) | $ (521) | $ 369 | $ 240 |
Income tax expense (% Change) | 53.80% | |||
Effective tax rate | 6.90% | 18.20% | ||
Effective tax rate (% Change) | (62.10%) |
Business Description and Summ_6
Business Description and Summary of Significant Accounting Policies - Additional Information (Details) | 9 Months Ended | ||
Sep. 30, 2021USD ($)Y | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Allowance for doubtful accounts | $ 154,000 | $ 188,000 | |
Warranty period | 27 months | ||
Warranty reserve | $ 396,000 | 382,000 | |
Inventory reserve | 1,645,000 | $ 1,720,000 | |
Income taxes paid | 345,000 | $ 425,000 | |
Interest paid | $ 110,000 | $ 116,000 | |
Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Period inventory is expected to be used | 1 year | ||
Number of years of customer requirements | Y | 2 | ||
Number of year's supply | Y | 1 |
Inventories - Summary of invent
Inventories - Summary of inventories (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Inventories | ||
Raw material and common parts | $ 16,266,000 | $ 16,989,000 |
Work-in-process | 2,760,000 | 4,273,000 |
Finished goods | 3,239,000 | 3,864,000 |
Inventory, Gross | 22,265,000 | 25,126,000 |
Less inventory reserve | (1,645,000) | (1,720,000) |
Total inventories | $ 20,620,000 | $ 23,406,000 |
Property, Plant and Equipment -
Property, Plant and Equipment - Summary of property, plant and equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | $ 32,778 | $ 32,710 |
Less accumulated depreciation and amortization | (21,730) | (20,693) |
Total property, plant and equipment | 11,048 | 12,017 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | 7 | 7 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | 11,363 | 11,359 |
Machinery, equipment and tooling | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | 21,193 | 21,146 |
Construction in progress (CIP) | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | $ 215 | $ 198 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization expense | $ 329,000 | $ 356,000 | $ 1,043,000 | $ 1,072,000 | |
Amortization expense | 8,000 | $ 15,000 | 42,000 | $ 50,000 | |
Construction in progress | 215,000 | 215,000 | $ 198,000 | ||
Property, plant and equipment, Gross | 32,778,000 | 32,778,000 | 32,710,000 | ||
Machinery, equipment and tooling | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, Gross | 21,193,000 | 21,193,000 | 21,146,000 | ||
Construction in progress (CIP) machinery & equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, Gross | 214,000 | 214,000 | 191,000 | ||
Construction in progress (CIP) building improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, Gross | 0 | 0 | 7,000 | ||
Construction in progress (CIP) IT equipment and software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, Gross | $ 1,000 | $ 1,000 | $ 0 |
Long-Term Debt - Summary of lon
Long-Term Debt - Summary of long term debt (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Instrument | ||
Long-term debt, Total | $ 5,630,000 | $ 9,928,000 |
Less current portion | (801,000) | (2,635,000) |
Long-term debt | 4,829,000 | 7,293,000 |
Paycheck protection program payable to financial institutions: Interest rate of 1% per annum. Unforgiven portion is payable monthly until April 20, 2022 (A) | ||
Debt Instrument | ||
Long-term debt, Total | 0 | 4,000,000 |
Line of credit payable to a financial institution; Interest rate option of bank prime or Libor plus 2.15% (B)(C) | ||
Debt Instrument | ||
Long-term debt, Total | 4,250,000 | 3,750,000 |
Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.486%, monthly principle payments of $21,833 through 2021 with a balloon payment of $286,000 due December 1, 2021(C). | ||
Debt Instrument | ||
Long-term debt, Total | 352,000 | 1,048,000 |
Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.486%, monthly principal payments of $23,810 through December 1, 2021 (C). | ||
Debt Instrument | ||
Long-term debt, Total | 71,000 | 286,000 |
Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/factor 1.795535% - 1.835015% as of September 30, 2021.(D) | ||
Debt Instrument | ||
Long-term debt, Total | 765,000 | 534,000 |
Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/ factor 1.822758% - 1.869304% at time of funding)(E) | ||
Debt Instrument | ||
Long-term debt, Total | $ 192,000 | $ 310,000 |
Long-Term Debt - Summary of l_2
Long-Term Debt - Summary of long term debt information (Details) - USD ($) | Dec. 01, 2021 | Sep. 30, 2021 |
Paycheck protection program payable to financial institutions: Interest rate of 1% per annum. Unforgiven portion is payable monthly until April 20, 2022 (A) | ||
Debt Instrument | ||
Percentage of fixed interest rate payable | 1.00% | |
Line of credit payable to a financial institution; Interest rate option of bank prime or Libor plus 2.15% (B)(C) | ||
Debt Instrument | ||
Spread on variable rate | 2.15% | |
Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.486%, monthly principle payments of $21,833 through 2021 with a balloon payment of $286,000 due December 1, 2021(C). | ||
Debt Instrument | ||
Monthly principal payments | $ 21,833 | |
Balloon payment due December 1, 2021 | 286,000 | |
Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.486%, monthly principal payments of $23,810 through December 1, 2021 (C). | ||
Debt Instrument | ||
Spread on variable rate | 1.486% | |
Monthly principal payments | $ 23,810 | |
Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/factor 1.795535% - 1.835015% as of September 30, 2021.(D) | Minimum | ||
Debt Instrument | ||
Percentage of floating interest rate payable | 1.79554% | |
Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/factor 1.795535% - 1.835015% as of September 30, 2021.(D) | Maximum | ||
Debt Instrument | ||
Percentage of floating interest rate payable | 1.83501% | |
Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/ factor 1.822758% - 1.869304% at time of funding)(E) | Minimum | ||
Debt Instrument | ||
Percentage of floating interest rate payable | 1.82276% | |
Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/ factor 1.822758% - 1.869304% at time of funding)(E) | Maximum | ||
Debt Instrument | ||
Percentage of floating interest rate payable | 1.8693% | |
LIBOR | Line of credit payable to a financial institution; Interest rate option of bank prime or Libor plus 2.15% (B)(C) | ||
Debt Instrument | ||
Spread on variable rate | 2.15% | |
LIBOR | Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.486%, monthly principle payments of $21,833 through 2021 with a balloon payment of $286,000 due December 1, 2021(C). | ||
Debt Instrument | ||
Spread on variable rate | 1.486% |
Long-Term Debt - Maturities (De
Long-Term Debt - Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Maturities - Topic 842 | ||
2021 | $ 137 | $ 331 |
2022 | 393 | 316 |
2023 | 246 | 169 |
2024 | 188 | 112 |
2025+ | 90 | |
Total principal and interest payments | 1,054 | 928 |
Less amount representing interest | (97) | (83) |
Present value of net minimum lease payments | 957 | 845 |
Less current portion | (378) | (301) |
Long-term principle payments | $ 579 | $ 544 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) - USD ($) | Apr. 21, 2020 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Jul. 09, 2021 | Apr. 21, 2021 | Dec. 31, 2020 | Jun. 28, 2018 |
Debt Instrument | ||||||||
Gain on Paycheck Protection Program loan forgiveness | $ 4,000,000 | $ 4,000,000 | ||||||
Amount drawn | 500,000 | $ 750,000 | ||||||
Long-term debt | 5,630,000 | 5,630,000 | $ 9,928,000 | |||||
Principal maturities of long-term debt for 2021 | 524,000 | 524,000 | ||||||
Principal maturities of long-term debt for 2022 | 4,614,000 | 4,614,000 | ||||||
Principal maturities of long-term debt for 2023 | 231,000 | 231,000 | ||||||
Principal maturities of long-term debt for 2024 | 178,000 | 178,000 | ||||||
Principal maturities of long-term debt for 2025 | 77,000 | 77,000 | ||||||
Principal maturities of long-term debt for 2026 | $ 6,000 | $ 6,000 | ||||||
Paycheck protection program payable to financial institutions: Interest rate of 1% per annum. Unforgiven portion is payable monthly until April 20, 2022 (A) | ||||||||
Debt Instrument | ||||||||
Debt Instrument, Face Amount | $ 4,000,000 | |||||||
Debt Instrument, Term | 2 years | |||||||
Percentage of PPP loan proceeds used to pay for payroll costs | 60.00% | |||||||
Gain on Paycheck Protection Program loan forgiveness | $ 4,057,000 | |||||||
Principle amount of Paycheck Protection Program loan forgiveness | 4,000,000 | |||||||
Accrued interest amount of Paycheck Protection Program loan forgiveness | $ 57,000 | |||||||
Percentage of fixed interest rate payable | 1.00% | 1.00% | ||||||
Lease term for equipment covered by lease line of credit | 2 years | |||||||
Line of credit payable to a financial institution; Interest rate option of bank prime or Libor plus 2.15% (B)(C) | ||||||||
Debt Instrument | ||||||||
Maximum borrowing capacity | $ 6,000,000 | $ 6,000,000 | ||||||
Spread on variable rate | 2.15% | |||||||
Commitment fee on unused portion of line of credit | 0.25% | |||||||
Balance outstanding of line of credit | 4,250,000 | $ 4,250,000 | 3,750,000 | |||||
Long-term debt | 4,250,000 | 4,250,000 | 3,750,000 | |||||
Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/factor 1.795535% - 1.835015% as of September 30, 2021.(D) | ||||||||
Debt Instrument | ||||||||
Maximum borrowing capacity | $ 1,000,000 | |||||||
Amount drawn | 384,000 | |||||||
Balance outstanding of line of credit | $ 765,000 | $ 765,000 | 534,000 | |||||
Loan term for equipment covered by loan | 60 months | 60 months | ||||||
Long-term debt | $ 765,000 | $ 765,000 | 534,000 | |||||
Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. Interest rate/ factor 1.822758% - 1.869304% at time of funding)(E) | ||||||||
Debt Instrument | ||||||||
Debt Instrument, Term | 60 months | |||||||
Lease line of credit | $ 1,000,000 | |||||||
Lease term for equipment covered by lease line of credit | 60 months | |||||||
Long-term debt | $ 192,000 | $ 192,000 | $ 310,000 |
Postretirement Benefit Plan (De
Postretirement Benefit Plan (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021USD ($)age | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)age | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Postretirement Benefit Plan | |||||
Minimum age entity to pay health and life insurance for retired executive | age | 65 | 65 | |||
Future obligation of benefits | $ 2,556,000 | $ 2,556,000 | $ 2,529,000 | ||
Benefit cost | $ 48,000 | $ 98,000 | $ 143,000 | $ 296,000 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of common shareholders' equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | $ 35,470 | $ 34,243 | $ 33,737 | $ 36,467 | $ 35,415 | $ 33,532 | $ 33,737 | $ 33,532 |
Retirement obligation, net of taxes | 15 | 16 | 15 | |||||
Purchase of treasury shares | (81) | (100) | ||||||
Stock based compensation | 25 | 25 | 31 | 83 | 87 | 85 | ||
Net Income | 3,238 | 1,186 | 541 | (1,782) | 965 | 1,898 | 4,965 | 1,081 |
Balance | 38,748 | 35,470 | 34,243 | 34,768 | 36,467 | 35,415 | 38,748 | 34,768 |
Retained earnings | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | 23,530 | 22,344 | 21,803 | 23,347 | 22,382 | 20,484 | 21,803 | 20,484 |
Retirement obligation, net of taxes | 0 | 0 | 0 | |||||
Purchase of treasury shares | 0 | 0 | ||||||
Stock based compensation | 0 | 0 | 0 | 0 | 0 | 0 | ||
Net Income | 3,238 | 1,186 | 541 | (1,782) | 965 | 1,898 | ||
Balance | 26,768 | 23,530 | 22,344 | 21,565 | 23,347 | 22,382 | 26,768 | 21,565 |
Accumulated Other Comprehensive Income (Loss) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | (1,325) | (1,341) | (1,356) | 98 | 98 | 98 | (1,356) | 98 |
Retirement obligation, net of taxes | 15 | 16 | 15 | |||||
Purchase of treasury shares | 0 | 0 | ||||||
Stock based compensation | 0 | 0 | 0 | 0 | 0 | 0 | ||
Net Income | 0 | 0 | 0 | 0 | 0 | 0 | ||
Balance | (1,310) | (1,325) | (1,341) | 98 | 98 | 98 | (1,310) | 98 |
Common Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | 523 | 523 | 523 | 523 | 523 | 523 | 523 | 523 |
Retirement obligation, net of taxes | 0 | 0 | 0 | |||||
Purchase of treasury shares | 0 | 0 | ||||||
Stock based compensation | 0 | 0 | 0 | 0 | 0 | 0 | ||
Net Income | 0 | 0 | 0 | 0 | 0 | 0 | ||
Balance | 523 | 523 | 523 | 523 | 523 | 523 | 523 | 523 |
Capital in excess of par value | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | 14,497 | 14,492 | 14,481 | 14,430 | 14,391 | 14,358 | 14,481 | 14,358 |
Retirement obligation, net of taxes | 0 | 0 | 0 | |||||
Purchase of treasury shares | 0 | 0 | ||||||
Stock based compensation | 1 | 5 | 11 | 29 | 39 | 33 | ||
Net Income | 0 | 0 | 0 | 0 | 0 | 0 | ||
Balance | 14,498 | 14,497 | 14,492 | 14,459 | 14,430 | 14,391 | 14,498 | 14,459 |
ESOT | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | (359) | (359) | (359) | (460) | (460) | (460) | (359) | (460) |
Retirement obligation, net of taxes | 0 | 0 | 0 | |||||
Purchase of treasury shares | 0 | 0 | ||||||
Stock based compensation | 0 | 0 | 0 | 0 | 0 | 0 | ||
Net Income | 0 | 0 | 0 | 0 | 0 | 0 | ||
Balance | (359) | (359) | (359) | (460) | (460) | (460) | (359) | (460) |
Treasury stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | (1,396) | (1,416) | (1,355) | (1,471) | (1,519) | (1,471) | (1,355) | (1,471) |
Retirement obligation, net of taxes | 0 | 0 | 0 | |||||
Purchase of treasury shares | (81) | (100) | ||||||
Stock based compensation | 24 | 20 | 20 | 54 | 48 | 52 | ||
Net Income | 0 | 0 | 0 | 0 | 0 | 0 | ||
Balance | $ (1,372) | $ (1,396) | $ (1,416) | $ (1,417) | $ (1,471) | $ (1,519) | $ (1,372) | $ (1,417) |
Shareholders' Equity - Restrict
Shareholders' Equity - Restricted stock activity (Details) - $ / shares | Jan. 01, 2021 | Sep. 30, 2021 |
Restricted Share Activity: | ||
Unvested at the beginning | 30,914 | 30,914 |
Granted | 13,160 | |
Vested | 34,206 | |
Unvested at the end | 9,868 | |
Weighted Average Grant Date Fair Value | ||
Unvested, beginning balance | $ 9.24 | $ 9.24 |
Granted | 7.60 | |
Vested | 9.08 | |
Unvested, ending balance | $ 7.60 | |
2012 Long Term Incentive Plan | ||
Restricted Share Activity: | ||
Vested | 25,250 |
Shareholders' Equity - Calculat
Shareholders' Equity - Calculation of earning per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Shareholders' Equity | ||||||||
Net income | $ 3,238 | $ 1,186 | $ 541 | $ (1,782) | $ 965 | $ 1,898 | $ 4,965 | $ 1,081 |
Weighted average common shares outstanding (basic) (in shares) | 2,410 | 2,363 | 2,404 | 2,358 | ||||
Unvested restricted stock (in shares) | 10 | 34 | 10 | 34 | ||||
Weighted average common shares outstanding (diluted) (in shares) | 2,420 | 2,397 | 2,414 | 2,392 | ||||
Basic | ||||||||
Net income (loss) per share | $ 1.34 | $ (0.75) | $ 2.07 | $ 0.46 | ||||
Diluted | ||||||||
Net income (loss) per share | $ 1.34 | $ (0.75) | $ 2.06 | $ 0.45 |
Shareholders' Equity - Share Re
Shareholders' Equity - Share Repurchase Program (Details) - Share Repurchase Program - shares | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Equity, Class of Treasury Stock [Line Items] | ||
Number of common shares authorized to be purchased | 450,000 | |
Number of shares purchased | 360,615 | |
Remaining number of shares authorized to be purchased | 89,385 | |
Shares purchased | 0 | 360 |
Shareholders' Equity - 2012 Lon
Shareholders' Equity - 2012 Long-Term Incentive Plan (Details) - USD ($) | Jan. 01, 2021 | Aug. 14, 2020 | Sep. 30, 2021 | Dec. 31, 2020 |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||
Number of restricted stock shares vested | 34,206 | |||
Stock-based compensation expense related to the restrictive share awards | $ 75,000 | $ 336,000 | ||
Non-employee directors | ||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||
Number of restricted stock issued | 13,160 | |||
Compensation expense not yet recognized | $ 100,000 | |||
2012 Long Term Incentive Plan | ||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||
Number of restricted stock shares vested | 25,250 | |||
Shares withheld to satisfy the tax obligations | 9,920 | |||
Value of shares withheld and repurchased | $ 81,000 |
Litigation (Details)
Litigation (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($) | |
Litigation | ||
Amount of alleged damages | $ 5,000,000 | |
Legal settlement awards | $ 1,890,000 | 1,890,000 |
Aero, Inc. | ||
Litigation | ||
Amount of alleged damages | 3,000,000 | |
Amount of counter claim | 3,191,000 | |
Charge associated with proposed settlement | 1,800,000 | 1,800,000 |
Gain or loss on litigation | 0 | |
The Ontario Knife Company | ||
Litigation | ||
Amount of alleged damages | 750,000 | |
Charge associated with proposed settlement | $ 90,000 | $ 90,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Related Party Transactions | ||||
Legal fees and disbursements | $ 13,000 | $ 18,000 | $ 59,000 | $ 150,000 |
Accrued additional legal fees | $ 13,000 | $ 25,000 | $ 13,000 | $ 25,000 |
Employee Retention Credit (Deta
Employee Retention Credit (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Employee Retention Credit | ||
Percentage of reduction in gross receipts to qualify for the ERC | 20.00% | |
Employee retention credit (ERC) | $ 1,978,000 | $ 5,622,000 |
Business Segments - Summary of
Business Segments - Summary of company's operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||||||||
Revenues from unaffiliated customers | $ 10,915,000 | $ 10,297,000 | $ 30,003,000 | $ 39,249,000 | |||||
Costs of goods sold, inclusive of depreciation and amortization | (9,143,000) | (10,462,000) | (25,366,000) | (31,682,000) | |||||
Gross margin (loss) | 1,772,000 | (165,000) | 4,637,000 | 7,567,000 | |||||
Selling, general and administrative | (2,721,000) | (2,096,000) | (6,903,000) | (6,112,000) | |||||
Litigation Settlement, Expense | 1,890,000 | 1,890,000 | |||||||
Total operating costs and expenses | 4,611,000 | 2,096,000 | 8,793,000 | 6,112,000 | |||||
Operating (loss)/income | (2,839,000) | (2,261,000) | (4,156,000) | 1,455,000 | |||||
Other income: employee retention credit (ERC) | 1,978,000 | 5,622,000 | |||||||
Gain On Paycheck Protection Program Loan Forgiveness | 4,000,000 | 4,000,000 | |||||||
Interest expense | (5,000) | (42,000) | (132,000) | (134,000) | |||||
Total other income/(expense) | 5,973,000 | (42,000) | 9,490,000 | (134,000) | |||||
Income (loss) before income tax provision | 3,134,000 | (2,303,000) | 5,334,000 | 1,321,000 | |||||
Income tax (benefit)/ provision | (104,000) | (521,000) | 369,000 | 240,000 | |||||
Net income/(loss) | 3,238,000 | $ 1,186,000 | $ 541,000 | (1,782,000) | $ 965,000 | $ 1,898,000 | 4,965,000 | 1,081,000 | |
Total Assets | 54,213,000 | 54,213,000 | $ 50,328,000 | ||||||
Capital expenditures | 68,000 | 708,000 | |||||||
Operating Segments | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues from unaffiliated customers | 10,915,000 | 10,297,000 | 30,003,000 | 39,249,000 | |||||
Costs of goods sold, inclusive of depreciation and amortization | (9,143,000) | (10,462,000) | (25,366,000) | (31,682,000) | |||||
Gross margin (loss) | $ 1,772,000 | $ (165,000) | $ 4,637,000 | $ 7,567,000 | |||||
Gross margin % | 16.20% | (1.60%) | 15.50% | 19.30% | |||||
Selling, general and administrative | $ (2,721,000) | $ (2,096,000) | $ (6,903,000) | $ (6,112,000) | |||||
Litigation Settlement, Expense | (1,890,000) | (1,890,000) | |||||||
Total operating costs and expenses | 13,754,000 | 12,558,000 | (34,159,000) | (37,794,000) | |||||
Operating (loss)/income | (2,839,000) | (2,261,000) | (4,156,000) | 1,455,000 | |||||
Other income: employee retention credit (ERC) | 1,978,000 | 5,622,000 | |||||||
Gain On Paycheck Protection Program Loan Forgiveness | 4,000,000 | 4,000,000 | |||||||
Interest expense | (5,000) | (42,000) | (132,000) | (134,000) | |||||
Total other income/(expense) | 5,973,000 | (42,000) | 9,490,000 | (134,000) | |||||
Income (loss) before income tax provision | 3,134,000 | (2,303,000) | 5,334,000 | 1,321,000 | |||||
Income tax (benefit)/ provision | (104,000) | (521,000) | 369,000 | 240,000 | |||||
Net income/(loss) | 3,238,000 | (1,782,000) | 4,965,000 | 1,081,000 | |||||
Total Assets | 54,213,000 | 54,213,000 | 50,328,000 | ||||||
Capital expenditures | 55,000 | 115,000 | 68,000 | 708,000 | |||||
Operating Segments | ATG | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues from unaffiliated customers | 8,449,000 | 8,184,000 | 23,495,000 | 33,228,000 | |||||
Costs of goods sold, inclusive of depreciation and amortization | (6,762,000) | (8,635,000) | (19,214,000) | (26,495,000) | |||||
Gross margin (loss) | $ 1,687,000 | $ (451,000) | $ 4,281,000 | $ 6,733,000 | |||||
Gross margin % | 20.00% | (5.50%) | 18.20% | 20.30% | |||||
Selling, general and administrative | $ (2,240,000) | $ (1,712,000) | $ (5,586,000) | $ (4,857,000) | |||||
Litigation Settlement, Expense | (1,800,000) | (1,800,000) | |||||||
Total operating costs and expenses | 10,802,000 | 10,347,000 | (26,600,000) | (31,352,000) | |||||
Operating (loss)/income | (2,353,000) | (2,163,000) | (3,105,000) | 1,876,000 | |||||
Other income: employee retention credit (ERC) | 1,598,000 | 4,584,000 | |||||||
Gain On Paycheck Protection Program Loan Forgiveness | 4,000,000 | 4,000,000 | |||||||
Interest expense | (5,000) | (41,000) | (130,000) | (125,000) | |||||
Total other income/(expense) | 5,593,000 | (41,000) | 8,454,000 | (125,000) | |||||
Income (loss) before income tax provision | 3,240,000 | (2,204,000) | 5,349,000 | 1,751,000 | |||||
Income tax (benefit)/ provision | (83,000) | (512,000) | 370,000 | 318,000 | |||||
Net income/(loss) | 3,323,000 | (1,692,000) | 4,979,000 | 1,433,000 | |||||
Total Assets | 44,784,000 | 44,784,000 | 40,826,000 | ||||||
Capital expenditures | 54,000 | 99,000 | 64,000 | 640,000 | |||||
Operating Segments | CPG | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues from unaffiliated customers | 2,466,000 | 2,113,000 | 6,508,000 | 6,021,000 | |||||
Costs of goods sold, inclusive of depreciation and amortization | (2,381,000) | (1,827,000) | (6,152,000) | (5,187,000) | |||||
Gross margin (loss) | $ 85,000 | $ 286,000 | $ 356,000 | $ 834,000 | |||||
Gross margin % | 3.40% | 13.50% | 5.50% | 13.90% | |||||
Selling, general and administrative | $ (481,000) | $ (384,000) | $ (1,317,000) | $ (1,255,000) | |||||
Litigation Settlement, Expense | (90,000) | (90,000) | |||||||
Total operating costs and expenses | 2,952,000 | 2,211,000 | (7,559,000) | (6,442,000) | |||||
Operating (loss)/income | (486,000) | (98,000) | (1,051,000) | (421,000) | |||||
Other income: employee retention credit (ERC) | 380,000 | 1,038,000 | |||||||
Interest expense | (1,000) | (2,000) | (9,000) | ||||||
Total other income/(expense) | 380,000 | (1,000) | 1,036,000 | (9,000) | |||||
Income (loss) before income tax provision | (106,000) | (99,000) | (15,000) | (430,000) | |||||
Income tax (benefit)/ provision | (21,000) | (9,000) | (1,000) | (78,000) | |||||
Net income/(loss) | (85,000) | (90,000) | (14,000) | (352,000) | |||||
Total Assets | 9,429,000 | 9,429,000 | $ 9,502,000 | ||||||
Capital expenditures | $ 1,000 | $ 16,000 | $ 4,000 | $ 68,000 |
Business Segments - Additional
Business Segments - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2021segment | |
Business Segments | |
Number of operating segments | 2 |